Everyone seems to understand that divorce involves the division of marital property and assets. However, over the years, I have found that many people fail to fully appreciate that divorce involves the division of debt, as well. Ironically, debt is typically cited as one of the top reasons couples split up. But, getting divorced doesn’t make those troublesome debt problems “magically” disappear. In fact, it’s exactly the opposite. Just as debt can often play a major role in the failure of a marriage, it can also play a major role in adding stress and contention to divorce proceedings. What can you do minimize nasty debt headaches during your divorce? My best advice is to be prepared. Educate yourself about debt, in a broad sense. Then, gather all the relevant data about your specific case. You’ll want to collect credit card bills, information from your mortgage/home equity/auto loan accounts, etc. and learn all you can about what you and your spouse owe. In addition, here are a few tips to help you better understand how to handle dividing debt in your divorce:
There are nine Community Property States: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Couples living in Alaska can “opt in” for community property, and Puerto Rico is a community property jurisdiction. The remaining 41 states are known as Equitable Distribution States (or Common Law States). Utah is one of these. In Utah, the court will try to either split the debt in half or perhaps do some creative offsets; but most of the time, if the debt was for and in behalf of the “marital estate”; then, the debt will be divided by both parties. (An earlier post discusses the differences between Community Property States and Equitable Distribution States in more detail.) In general terms, if you live in an Equitable Distribution State, debt that’s incurred during a marriage is the joint responsibility of both parties, provided both parties are co-signers on the account (mortgage, credit card, etc.). In other words, if your husband opened a credit card account in his name only, then only he is responsible for that debt. In Community Property States, both spouses are responsible, even if only one incurred the debt. Of course, once you and your husband have separated, the rules change. Any debt incurred after you separate is the sole responsibility of the person who made the charges. The wrinkle here is that “the moment of separation” varies from state to state. In some states, you need to legally declare a separation. In others, a legal separation is not required; you’re separated once you start living apart.
Either way, the goal is to separate your finances (and any remaining debt) from your husband’s finances (and any of his remaining debt). As a result, you’ll remove your liability for what he owes. If possible, you’ll also want to close joint credit cards and eliminate your husband as an authorized used on any credit cards in your name. Remember: Credit card companies and other third party agents are not bound by divorce agreements. It may sound harsh, but if your names are both on a credit card account, the credit card company can hold you responsible if your ex rings up a balance and then decides not to pay. One word of caution here: New federal regulations are making it harder than ever for women with little or no income to establish credit on their own. You’ll need to proceed with caution as you set out to establish credit in your own name . . . Which brings up my third point . . .
A good first step should be to create a budget that will allow you to maintain your lifestyle, pay off any remaining debt and increase your savings. A divorce financial planner can help you determine how to manage your assets and which adjustments are necessary for continued financial stability. Free Consultation with Divorce Lawyer in UtahIf you have a question about divorce law or if you need to start or defend against a divorce case in Utah call Ascent Law at (801) 676-5506. We will fhelp you.
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Imputed Income for Child Support in Utah What is an Acceptable Use Policy? Getting Guardianship of your Aging Parent via Michael Anderson http://www.ascentlawfirm.com/divorce-with-debts/
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ABOUTHi i am Alba Stadler. If you need utah divorce and bankruptcy lawyer, child custody, adoption or family law attorney who does child custody, father’s rights, divorces and bankruptcy – both chapter 7 bankruptcy and chapter 13 bankruptcy law that cares about you, your family, your case, and is aggressive, call 801-676-5506 now for a free consultation. I recommend them to anyone they are professional, divorce and bankruptcy in Utah can be tough, so you need a smart divorce and bankruptcy lawyer who can help you today. Archives
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