If you and your spouse have agreed to a divorce, there are some other things you'll have to agree on, as well. Issues such as child custody, marital asset division and spousal support that take a lot of time to arrange. One issue that you might not have thought about is the division of debt. However, the division of marital debt is just as important as all the other issues listed above. In fact, if you're not careful, marital debt can follow you for years, making your life miserable. This is particularly true if the debt isn't divided fairly. Here are four suggestions for resolving the issue of marital debt.
Pay it off
If you and your spouse have an adequate source of cash or other liquid assets, the marital debts you have should be paid off prior to your divorce. By paying the debts off prior to your divorce, you and your spouse won't be required to fight about a division plan during the divorce proceedings. This method will only work if you have a sufficient supply of cash and you won't need that cash to rebuild your life after the divorce.
Take Turns Choosing
If you and your spouse are on good terms in the beginning stages of your divorce, you may want to evenly distribute the debts between the two of you. Make a list of the debts and take turns choosing the ones you're will to take on. This can work well if you also have a list of assets that you each want. For each debt you agree to take, you can choose one asset that you want. If you and your spouse are not able to communicate well, this method may not work to your advantage. This is particularly true if you are easily intimidated by your spouse.
Trade Debts for Assets
If you can afford to pay the debts, but your spouse can't, you might want to trade debts for assets. This is particularly beneficial if there are substantial assets that you want to secure from the divorce. Agreeing to take on the bulk of the debts may give you better leverage to demand more of the marital assets.
File for Bankruptcy
If your finances are in bad shape, and you see no way out, you and your spouse may want to file for bankruptcy before you file for divorce. While the bankruptcy will remain on your credit report for the next seven to ten years, your marital debt will be wiped out and you will be able to build your own credit from a clean slate.
If you and your spouse are filing for divorce, you're going to need to deal with your marital debts. Use the suggestions provided above to help navigate your way through debt resolution. For other questions or concerns, be sure to speak to your divorce attorney (such as McKissick & McKissick).