The complexities associated with divorce can take its toll on the individuals who are going through the process. It is important for you to have competent legal representation to ensure that every detail associated with the divorce proceedings is resolved efficiently. One of the biggest concerns that couples need to address during divorce proceedings is the issue of debt. Debt can be classified as separate or marital. The latter example refers to the debt that is incurred by a couple during their marriage. Both spouses are responsible for resolving marital debt even after the divorce proceedings have concluded. An asset acquired during the divorce proceedings will also mean that you are obligated to look after the debts associated with that asset. Even if your spouse does agree to take care of any debt associated with an asset, creditors can still seek payment from you if you were jointly responsible for the asset during your marriage.
There are many types of debt and you need to be familiar with each of them to avoid the pitfalls that are associated with securing assets during the divorce proceedings. Secured debt gives creditors the right to repossess property in case of a default on your loan. If a loan was made under both your names, you need to explicitly state who is responsible for covering the loan payments in your separation agreement. Unsecured debt does not give creditors the power to repossess property. A tax debt will hold you liable for payments if you sign joint tax returns. Divorce expense debt comes into play generally when only one works. In this case, the spouse who generates income may be obligated by the judge to take care of legal fees for both spouses.
Everyone involved in the divorce proceedings needs be aware of the effects that bankruptcy may take during the division of properties. If your spouse files for bankruptcy, there is a good chance that his debts may be wiped out as a result. This detail is critical in case your spouse uses a property settlement note to resolve certain divisions of assets. There are cases where a spouse uses a property settlement note during the divorce proceedings only to file for bankruptcy later on. Someone who cites a property settlement note as a debt can have it wiped out under bankruptcy law.
It is vital for you and your spouse to clearly delineate how marital property and debt should be divided during divorce proceedings. There are numerous ways to divide debts. For example, you can either pay off the bulk of your debts or your spouse can do so in exchange for alimony and a greater portion of the marital assets. Splitting marital assets 50 – 50 is also one way to go. A divorce attorney can help you to strategize how to effectively divide debt to have the least negative impact on your credit and draft a divorce decree that will protect you in case of default.
It is important for you to find legal representation to resolve questions that you may have involving debt and divorce. Contact Daniella Lyttle at Lyttle Law Firm, PLLC by calling 512-215-5225 if you need help reaching a satisfying resolution to your divorce.