Asset Division Includes Dividing Debts
One of the most complex aspects of the divorce process can be dividing marital assets — and debts. When a court divides a divorcing couple’s debts, its goal is primarily to divide the debts in a way that is fair to both parties. In a simple world, this would mean allotting each side half of the marital debts, but this is much more complicated. Debts are often only in one party’s name and different types of debts have features which make them very difficult to divide.
To understand any of this, its important first to know that there are primarily, two kinds of debts: secured and unsecured.
In theory, the division of secured debts (a mortgage, car loan or student loan) is pretty simple: The party who takes the piece of property also takes the debt associated with it. This process is complicated when the secured property depreciates in value, or if a lender requires the now-single divorced spouse to show a second source of income in order to refinance the property.
The division of unsecured debts (things like credit cards and student loans), usually works the way the division of assets works — what is gained during marriage is deemed as part of the marriage and divided evenly. Problems arise, however, when one spouse is required to pay the debts that are solely in the other spouse’s name. Of course the problems are exacerbated if and when there is a default on any such debt.
In short, the issue of debt division in divorce is complicated. It is critical to understand the fine details of these issues before going to the negotiating table. Anyone considering divorce or in the middle of one should have an experienced divorce attorney by their side. Contact Boyer, Dawson & St. Pierre in Sterling Heights today at 888-559-4705.