Divorce can be a challenging process, and one of the most complex aspects is dealing with shared debt. As you move forward, it is crucial to understand the division of debt and what you can do to protect your financial future.
Understanding debt division in divorce
The process may not always be straightforward when dividing debt during a divorce. Generally, debts incurred during the marriage may count as marital debts and divided between both parties. However, the specifics may vary depending on your situation and local laws.
In California, the law treats marital finances as a shared responsibility. When couples part ways, equal division applies to assets and liabilities accumulated during the marriage. This means you and your former partner may each bear half the burden of joint debts.
You might be surprised to learn that even if a debt is only in one spouse’s name, it could still count as marital debt if it happened during the marriage for family purposes. This means you could be responsible for debts you did not directly incur.
Protecting your financial future
Below are steps you may consider to protect your finances:
- Get a clear picture of all debts: You may want to make a comprehensive list of all debts.
- Close joint accounts: If possible, close any joint accounts to prevent your ex-spouse from incurring additional debt in your name.
- Monitor your credit: Consider regularly checking your credit report to ensure your ex-spouse is not using your information to open new accounts.
- Consider refinancing: If you are keeping a shared asset like a house, consider refinancing it in your name only to remove your ex-spouse from the loan.
While the court may assign debt responsibility during the divorce, creditors may still come after you for joint debts if your ex-spouse does not pay. Addressing these issues during the divorce proceedings may be in your best interest. Consider consulting with an attorney who could provide personalized guidance based on your specific situation.
Understanding your rights and responsibilities regarding debt after divorce may allow you to take the necessary steps to protect your financial future and start your new chapter on solid financial footing.