In almost all marriages, the spouses have joint debts.
These debts can range from mortgages, credit cards, medical bills, car notes, and expenses for children. In addition to dividing your marital assets, another main hurdle is resolving your joint debts. Each spouse must be able to walk away from the marriage with credit to secure new housing and new loan opportunities.
One of the most popular ways to resolve payment for marital debts is to use marital assets to pay off as many debts as possible.
The most common investment to sell to pay off the joint debts of the marriage is the marital home. But suppose the parties do not have enough resources to liquidate to pay off all marital debts. In that case, the spouses should have an agreement stating who will be responsible for ongoing payments on the debts to ensure they get paid. Payment plans can be entered into for most debts, but an ongoing payment plan is usually not ideal. If one spouse defaults and stops making payments on a debt, the creditor of a joint debt can still go after the other spouse regardless of the agreement between the spouses. Also, a spouse’s credit history will be negatively affected if the other spouse doesn’t timely make payments on the joint debts that they agreed to pay off.
When possible, you should always use all assets and money available to you to pay off marital debts, including all credit cards, so that you do not continue to be tied to your ex-spouse financially.
Suppose you find yourself in a situation where you have no more marital assets to use to pay off marital debts. In that case, I recommend each spouse obtain a private loan or open a new credit card in their sole name. Another option is that parties take a loan from their retirement assets to pay off the marital debts. Each party pays off the marital debt as they agreed, using their new loans that only they are liable for. In doing so, you ensure you are not bound to your ex-spouse and rely on them to remit payment for marital debts. If your ex-spouse refuses or doesn’t make the payment, only their credit history, and not yours, will be negatively affected.
Ensuring that you do not give your ex-spouse any power over your credit score has tremendous value and should be your goal when deciding how to pay off debts.
If you or someone you know is going through a divorce and needs legal advice about resolving marital debts, call the family law attorneys at Andalman & Flynn to schedule a consultation to ensure your rights and finances moving forward are being protected.
About Andalman & Flynn, P.C.: Founded in 1998 in downtown Silver Spring, Maryland, Andalman & Flynn has forged a distinguished reputation for legal excellence. The Firm practices family law, estate planning, and probate throughout Maryland and the District of Columbia, and represents individuals seeking disability benefits throughout the country. The Firm focuses on cases that impact the rights of everyone and is there for clients when responsive legal help is most critical. The Firm has provided legal analysis on national and local television and radio, and its attorneys often testify before legislative bodies and are routinely invited to contribute to prominent legal publications. For more information about Andalman & Flynn, please visit the website at andalmanflynn.com or call 301.563.6685.