Dannenbaum Law Firm, PLLC

Dividing debt during your divorce

Aside from issues concerning your children, one of the most contentious elements of a divorce is the division of marital property. In Virginia and in most states, marital property is any asset you acquired from the date of your marriage. This may be a house you purchased together, appreciation of your spouse's business or interest you earned on your individual checking account. Unless you have a prenuptial agreement to keep those items separate, they are on the table during a divorce.

Following the same principal, a Virginia family court will equitably divide all joint debts accumulated during your marriage. Equitable division does not necessarily mean equal, and you may end up responsible for paying on a joint credit card or other debt your spouse acquired alone. Likewise, a judge may rule that your spouse will take over the mortgage payments, for example, even though the loan is in both of your names. This is a risky situation you want to avoid.

What's yours is mine

Even if a divorce court assigns a joint debt to one partner, the lender does not have to abide by this ruling. If your name is on a loan and your spouse stops paying, the lender has the legal right to seek payment from you or to turn you over to a debt collector, further damaging your credit.

The best way to avoid this is to pay off as many joint debts as possible before you begin divorce proceedings. Of course, if this were as easy to do as it is to say, everyone would be out of debt. However, the more of those accounts you can close, the easier it will be both during and after the divorce.

Secured or unsecured debt?

Secured debt is attached to some property. For example, your mortgage and vehicle payments have your house and car as collateral, and the lender can reclaim the property if you fail to make the payments. When the court divides secure debt, it offsets the amount of the debt by the asset's value.

Unsecured debt has no collateral, and joint debt that is unsecured, like credit cards, gets divided equitably. Any debt, secured or unsecured, that is not jointly owned belongs to the individual spouse. For example, if you and your spouse each have separate credit card accounts for which the other spouse does not share access, you would each be responsible for your own debt on those cards.

Of course, with any decisions made during a divorce, the best ones are often those spouses can work out together rather than waiting for the court to decide. If you and your spouse come up with a debt division plan, it is a good idea to allow your attorney to review it to ensure you are not taking on more than your share of debt.

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