Bedrock Divorce Advisors
My Forbes.com Articles
- What A Divorcing Woman Needs To Know About Her Husband's Cash-Based Business
- Seven Key Points Divorcing Women Need To Know About Real Estate And Real Estate Appraisals
- Small World, Big Problem: Divorces Involving Dual Citizenship
- Five Best Financial Tips for Women Divorcing in 2013
- Financial Strategies for Divorcing A Narcissist
- Domestic Violence: The Awareness We Overlook
- Three Types of Financial Mistakes Divorcing Women Make (And How to Avoid Them)
- What Are the Consequences Of Hiding Assets During Divorce?
- Four Reasons Why A Woman Needs A Vocational Expert On Her Divorce Team
- Divorcing Women, Especially Those in Abusive Relationships, Benefit From Learning How to Secure Their Financial Futures
- How To Handle Difficult To Divide Assets
- Seven Must-Do Steps For Women Who Want Financial Stability Post-Divorce
- Can a Trust Protect My Assets in Divorce?
- Divorcing Women: Here's What You Need to Know About ATROs
- My Best Financial Advice for the Bride-to-Be
- What Would Monica Geller Say About Courteney Cox's Divorce Strategy?
- How Divorcing Women Should Handle Retirement Accounts and Pension Plans
- Three of the Most Frequently Asked Questions About Health Insurance, Life Insurance and Social Security After Divorce
- How Some Men Are Upending Domestic Violence Laws to Scam an Advantage in Divorce
- The Five Key Points Divorcing Women Need to Know About Financial Affidavits
- Divorce Is Final, No Do-Overs Allowed
- The Four Divorce Alternatives
- How "Conflicting Out" Top Divorce Attorneys Can Impact Your Divorce
- Why Women Who Are Organized Often Do Better in Divorce
- 21 Signs That Your Husband May Be Hiding Marital Assets During Your Divorce
- Divorcing Women: Here's Where Husbands Typically Hide Assets
- Tax Tips for Women Going Through Divorce
- Three Key Steps to Help a Woman Protect Her Finances When Leaving an Abusive Marriage
- Divorcing Women: Don't Make These Five Costly Mistakes
- Why a Lifestyle Analysis Is So Critically Important For Divorcing Women
- The Six Personal Traits That Help Women Successfully Survive Divorce
- Why Do Successful Women Fall Victim to the Oscar Love Curse?
- Who Pays for College Tuition? Top Factors for Divorcing Women to Consider
- Alimony Reforms Continue to Create More Uncertainty for Divorcing Women
- Legal Separation or Divorce: Which is Better Financially?
- How Can a Divorcing Woman Get the Child Support, Alimony She is Owed?
- End-of-the-Year Checklist for Divorcing Women
- Seven Key Things Women Need to Know About the Tax Implications of Alimony Payments
- Five Steps a Woman Can Take to Help Her Family-Run Business Survive Divorce
- What is an Alimony Trust and Why NBA Ex-Wives Might Wish They Had One
- Study Shows Divorced Women Have Less Economic Security Than Women Who Stay Married
- Five Financial Lessons Women Can Learn from the Demi and Ashton Break-up Rumors
- How the Valuation Dates of Different Assets Are Decided During Divorce
- Why Divorcing Women Need to Pay Careful Attention to the Date of Separation
- Divorce Advice For Physically And Financially Abused Women
- Warning: Don't Let Friends, Family or Non-Divorce Professionals Give You Divorce Advice
- What a Volatile Stock Market May Mean for a Woman’s Divorce Settlement Agreement
- Why Even Happily Married Women Should Meet with a Divorce Financial Advisor
- Divorcing Women Need to Answer These Key Questions Before Deciding to Keep The House
- Don’t Let Your Ex-Husband Inherit Your 401(k)
- Six Must-Do Financial Steps for Women Facing Divorce
- In Many States, Alimony Reform Has Gone Too Far
- Five Ways To Tell If Your Husband Is Hiding Assets
- Financial Tips for Women Facing Grey Divorce
- Can You Get a Divorce Do-over?
- June Brides, Are You Ready for Divorce?
- Upfront Lump Sum Payment or Alimony? Why Some NFL Ex-Wives Are Now Smiling
- Does Maria Shriver Have A Prenup? Why Did Arnold Put His Movie Career On Hold?
- The Secret to Surviving Divorce With Your Finances Intact
- Even Affluent Women May No Longer Be Eligible For Credit Cards
- The Big Thing Celebrities Fight Most About When They Divorce - And Why You Should, Too
- Should You Disinherit Your Husband?
- Divorce-Proof Your Business, Even If You’re Still Single Or Happily Married!
- Understanding How Assets Get Divided in Divorce
- Welcome to Divorce Dollars and Sense
- Do You Live in a Community Property State or an Equitable Distribution State? on
- The Difference Between Separate and Marital Property on
- How is Debt Divided in Divorce? on
- The Difference Between Separate and Marital Property on
- How to Find a Divorce Attorney, Divorce Financial Planner and Other Members of Your Divorce Team on
How is Debt Divided in Divorce?
Everyone seems to understand that divorce involves the division of marital property and assets.
However, over the years, I have found that many people fail to fully appreciate that divorce involves the division of debt, as well.
Ironically, debt is typically cited as one of the top reasons couples split up. But, getting divorced doesn’t make those troublesome debt problems “magically” disappear. In fact, it’s exactly the opposite. Just as debt can often play a major role in the failure of a marriage, it can also play a major role in adding stress and contention to divorce proceedings.
What can you do minimize nasty debt headaches during your divorce? My best advice is to be prepared. Educate yourself about debt, in a broad sense. Then, gather all the relevant data about your specific case. You’ll want to collect credit card bills, information from your mortgage/home equity/auto loan accounts, etc. and learn all you can about what you and your spouse owe.
In addition, here are a few tips to help you better understand how to handle dividing debt in your divorce:
1. Where you live impacts how debt will be divided. Divorce laws differ from state to state, and how your debt will be divided depends largely on where you live and whether you live in a Community Property State or an Equitable Distribution State.
There are nine Community Property States: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Couples living in Alaska can “opt in” for community property, and Puerto Rico is a community property jurisdiction.
The remaining 41 states are known as Equitable Distribution States (or Common Law States).
(An earlier post discusses the differences between Community Property States and Equitable Distribution States in more detail.)
In general terms, if you live in an Equitable Distribution State, debt that’s incurred during a marriage is the joint responsibility of both parties, provided both parties are co-signers on the account (mortgage, credit card, etc.). In other words, if your husband opened a credit card account in his name only, then only he is responsible for that debt.
In Community Property States, both spouses are responsible, even if only one incurred the debt.
Of course, once you and your husband have separated, the rules change. Any debt incurred after you separate is the sole responsibility of the person who made the charges. The wrinkle here is that “the moment of separation” varies from state to state. In some states, you need to legally declare a separation. In others, a legal separation is not required; you’re separated once you start living apart.
2. It’s often best to eliminate shared debt. Our firm usually advises women to eliminate shared debt before the divorce is final. Naturally, that may mean you need to use marital assets to jointly pay off what you owe –but, usually that’s a worthwhile step, if it means you can begin your single life with a fresh start. Alternatively, some couples decide to divide and transfer their debts, so that each person is individually responsible only for his or her portion.
Either way, the goal is to separate your finances (and any remaining debt) from your husband’s finances (and any of his remaining debt). As a result, you’ll remove your liability for what he owes.
If possible, you’ll also want to close joint credit cards and eliminate your husband as an authorized used on any credit cards in your name. Remember: Credit card companies and other third party agents are not bound by divorce agreements. It may sound harsh, but if your names are both on a credit card account, the credit card company can hold you responsible if your ex rings up a balance and then decides not to pay.
One word of caution here: New federal regulations are making it harder than ever for women with little or no income to establish credit on their own. You’ll need to proceed with caution as you set out to establish credit in your own name . . . Which brings up my third point . . .
3. Protect your credit. Once you have: a) established control of your own debt and b) separated your liability from your husband’s debt, it’s time to turn the page and begin a new chapter. You’ll need to establish credit in your own name –and then, once that credit is established, you’ll need to work hard to protect it. Start slowly and proceed with caution, keeping a careful watch on credit card balances, debit and ATM cards, etc.
A good first step should be to create a budget that will allow you to maintain your lifestyle, pay off any remaining debt and increase your savings. A divorce financial planner can help you determine how to manage your assets and which adjustments are necessary for continued financial stability.
All articles/blog posts are for informational purposes only, and do not constitute legal advice. If you require legal advice, retain a lawyer licensed in your jurisdiction. The opinions expressed are solely those of the author, who is not an attorney.