When couples go through a divorce, one of their first steps is often to divide up their marital assets. If they jointly own these assets, they have to go through property division. Common examples include savings, investments, real estate, vehicles and home furnishings.
But what happens to the debt that this couple holds at the time of their divorce?
In many cases, debt is handled the same way as joint assets. If couples have shared debt, that obligation is part of their marital relationship and is owned jointly. It will need to be divided during the divorce.
2 potential examples
One example is simply credit card debt. Many couples have joint credit card accounts. They both have their own physical card, but all purchases made on either card are applied to the same account.
Another example could be a home mortgage. Many couples apply for a mortgage together, which can make it easier for them to receive the loan that they need. If the house is not paid off at the time of the divorce, this obligation still remains and applies to both people.
In some cases, couples will simply pay off credit card debt, close the account and open a new card in their own name. In the case of a home mortgage, the couple may decide that the easiest tactic is to sell the house and use the proceeds to pay off the remaining balance of the loan.
Every case is unique, however, and it is important for couples to understand that both debts and assets can be owned jointly. While navigating the complexities of property division, they must know what legal steps to take.
