A successful marriage typically requires that spouses combine their finances. They share resources and may enjoy a higher standard of living together than they could ever maintain living separately. When they decide to divorce, financial challenges are common. Many spouses have a difficult time agreeing on how they should divide their property. People preparing for divorces tend to focus on high-value assets like family-owned businesses, real estate holdings and retirement savings.
Other financial considerations may not receive the attention that they deserve. For example, people frequently make the mistake of overlooking or downplaying marital debts during property division negotiations. However, debt can play a major role in the outcome of divorce proceedings.
Marital debts are common
Most families rely on some form of revolving credit to make ends meet. Even families with two successful working spouses may rely on credit cards for unusual expenses like vehicle repairs. In fact, successful professionals tend to have higher levels of revolving debt than those in lower-income situations. The debts that people take on during the marriage are likely marital debts. Even credit cards held in the name of one spouse are likely subject to division under equitable distribution rules.
How do people divide debts?
There are many different ways to handle marital debts in an Indiana divorce. Sometimes, each spouse accepts responsibility for certain financial accounts. Other times, one spouse who earns more or takes more of the marital estate also accepts more of the family debt. Custody arrangements can also affect the division of debt in some cases.
The main concern when splitting up debts can be the possibility of one spouse defaulting. If both spouses are cosigners on an account, a family court order is unlikely to protect the other spouse from financial responsibility after a default. Some spouses choose to avoid future debt-related disputes by using marital property to cover all marital debts. The fewer financial obligations that spouses have to continue paying after the divorce, the less opportunity there is for this conduct to occur.
Carefully evaluating the ins and outs of one’s marital estate can help people set appropriate goals when dividing their assets and debts. An informed approach to marital debt can lead to financial stability after a divorce.
