You and your spouse may be treading new waters as you face divorce. This is an event you never expected and one for which you feel uncertain and confused. You may be facing emotions that are new to you, such as those you felt as you and your spouse systematically divided your belongings. Now comes a new challenge.
Pennsylvania is an equitable division state, meaning all assets accumulated during your marriage are divided fairly, though not necessarily evenly, between you and your spouse. However, this equitable distribution also includes your debts.
Dividing your debt
Along with separating your assets, you and your spouse must divide your debts. This may include your mortgage, credit cards, medical bills and car payments. Any debt you or your spouse had when you came into the marriage remains separate, but all debt, even those joint credit card purchases your spouse made without your knowledge, are legally the property of both of you.
If your spouse’s name is the only one on a loan or credit card, chances are good that you will not end up responsible for paying that debt after the divorce. However, joint accounts are fair game for division, whether it is secured debt or unsecured. The difference is that secured debt has some asset attached to it, such as a car or a house. The court will likely offset the debt with the value of the asset.
The drawback to equitable debt distribution
Even if the court orders you to pay certain debts you jointly accumulated, the creditor still has a legal right to pursue both of you if you do not pay the debt. Therefore, if the court assigned your spouse to make the mortgage payments, and your spouse refuses, the bank can foreclose on you, and your credit rating will suffer. This means you may spend some time after the divorce keeping on top of whether your ex is paying his or her fair share of the marital debt.
Some strategies to prevent this include:
- Pay off as much of your joint debt as possible before you file for divorce.
- Discuss your debt situation with your spouse and negotiate the division of your debt outside of court.
- Refinance or reorganize the debt to remove each other’s names from the debts which the court assigns to you to pay.
- Seek the assistance of an experienced attorney who will work for a fair resolution to your debt division.
While division of assets and debts may seem frustrating, it is critical to get a fair settlement since it will set the stage for your future financial circumstances after the divorce is finalized.