There are many financial issues that spouses need to address when they divorce. The focus is often on the division of property and the need for financial support. However, debt can also be an important consideration during divorce.
Couples may have a variety of different debts ranging from student loans and mortgages to credit card balances. Debt can, therefore, play a major role in divorce negotiations and the final outcome of property division proceedings.
How can couples handle debt during a Virginia divorce?
Determining which debts are marital
The first step in addressing debt as part of a divorce is to establish which debts are part of the marital estate. As an equitable distribution state, Virginia cares more about when and why people acquired debt rather than the name on the account. For example, credit card balances accrued during marriage may be the responsibility of both spouses even if the account is in only one spouse’s name. The same is true of student loans or medical debt.
Certain debts won’t be part of the marital estate. Debts that existed prior to marriage, debts people incur after separating and debts created to diminish the marital estate are all potentially the separate responsibility of one spouse.
Finding appropriate debt solutions
There are a variety of ways to address personal debt in a divorce. Each spouse could accept responsibility for certain accounts. The spouses could use marital resources to pay off most shared debts. One spouse might even accept more marital debt than the other because they have a higher income or retain more of the marital estate.
Those attempting to negotiate their own arrangements for settling marital debt need to know one important fact. While the family courts can declare the other spouse responsible for a debt, neither the civil courts nor individual creditors are likely to give that court order much consideration.
If the spouse who accepts responsibility for certain debts defaults on payments or files for bankruptcy, the other spouse might be liable for those amounts even after the divorce. If they are a cosigner on the account, creditors can still hold them accountable regardless of the property division order.
Spouses who keep this information in mind may be able to establish effective solutions for their property division concerns during a Virginia divorce. There may be more than one viable means of handling marital debts depending on a family’s situation.
