How to Divide Your Debts in a Divorce

Dealing with money in a divorce is one of the hardest things for most couples. You can divide your debts fairly if you take time to list them and think about them carefully.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Stress Relief Products
• Calculators

1. Consult an attorney or a book about divorce laws in your state. You need to have an understanding of your state's laws about debt division. Ask the attorney for advice about how the debts in your situation should be split.
2. Make a complete list of all debts, both joint and separate. List the name of the creditor, the balance owed and the account number.
3. Understand that any separate debts that were created before the marriage will probably stay with the spouse who incurred them. Try to divide those debts into two columns - one for each of you.
4. Realize that some debts should be at the top of your list to pay. You should always pay your taxes, because the fines and penalties can be extraordinary. You want to make sure you pay your utility and mortgage or rent bills so that you have a place to live.
5. Determine how much each of you will have in income. The person with more income has a better ability to pay more of the debt.
6. Decide if there are any debts you can pay off immediately (such as credit cards) or eliminate (such as a home mortgage that will be paid off when you sell the house).
7. Think about who will benefit from each debt. For example, the person who keeps the car will benefit from the car loan. It often makes sense for this person to take on this debt.
8. Consider each person's overall situation. If you will be going back to college, you will have a harder time paying debts while you are in school than your spouse who works full-time.
9. Talk to each other rationally and try to split your debts in a way that seems fair and does not unreasonably burden either of you.
10. Get information about debt consolidation and bankruptcy if the situation is very bad.
11. Obtain a copy of your credit report if you do not know all the debts your spouse has incurred.
12. Have your lawyer or the court incorporate your agreement about debt division into your judgment of divorce.

Tips & Warnings

• Money is often one of the most difficult issues in a divorce, as both people often feel they are going to be "taken to the cleaners." Remember that as important as finances are, they are not as important as the emotional health of you and your children.
• If you cannot reach an agreement about debt division, be aware that the court will decide for you.
• Consider seeing a mediator to help you work out these decisions.
• Be sure to hire an attorney if you believe your spouse is hiding assets or is dishonest about finances.