Whether or not finances were a point of contention during your marriage, they may become one in the divorce. Particularly when it comes to managing any debts and liabilities.
It is normal to worry about your finances after your marriage ends, so you may wonder what will happen to this debt. If most of it belongs to your spouse, could you somehow still be held responsible for it?
When the answer is likely “No”
As you may know, your marital debts are distributed between you and your ex-spouse just like your marital assets. However, you may not be on the hook for debt in your ex-spouse’s name if these liabilities are:
- Separate debts: Assuming these liabilities did not become commingled property – by you helping your spouse pay them – any debts or loans your spouse owned before you got married will likely remain their responsibility. Student loans are a common example of this kind of debt.
- Properly divided joint debt: If you and your ex-spouse address your joint debts effectively, then you will likely not be responsible for them. Consider your joint credit card account for an example. Once you divide the debt – usually by who incurred it – and pay off your balance, then you should close the account. That way, you will not be responsible for the credit card debt your ex incurred, even if they have to transfer their remaining balance.
When you properly handle your debt in divorce, you help protect your future self.
When the answer may be “Yes”
Your North Carolina divorce agreement may detail how you will divide marital debts. However, that agreement holds no bearing over loan agreements. As CBS News recently reported, if you do not take the steps to adjust lending agreements or close joint accounts, and your ex-spouse stops paying their share, then you could potentially be responsible.
That is why it is essential to be proactive when it comes to debt during and after the divorce. Assess your situation carefully as you begin the process and take inventory of both separate and marital debts. Stand strong as you negotiate the distribution of your assets and debts. After you finalize the divorce, ensure you separate your liabilities and handle these accounts, so you can keep your own financial future secure.