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What Happens to Debt in a Divorce?

Towson divorce lawyers provide counsel on who is responsible for paying off the debt in a divorce.Splitting up marital assets in a divorce is a difficult task, but what happens to the marital couple’s debt in a divorce settlement? Student loans, car payments, charge accounts, and mortgages can add up to a hefty sum. Deciding how much each spouse is responsible for repaying is often an emotionally charged process.

It is very important that a divorcing couple look closely at their debt obligations and determine who is ultimately responsible for paying off the debt. Marital debt is that which was accumulated during the marriage. Many couples open joint credit cards and have both names on their mortgage and car payments. Creditors have a legal right to demand payment from both spouses.

If the spouse that is responsible for repaying a debt fails to do so, the creditor has a legal right to report both spouses to the credit bureau. A divorce judge does not have the power to excuse a spouse from debt. The creditor is a separate entity when it comes to repayment because they did not have any power in deciding which spouse was ultimately responsible to satisfy the balance on the loan. The spouse that chooses to pay the loan, even when they were not deemed responsible by the judge, can petition the court for reimbursement.

Marital Property and Equitable Distribution

Divorcing couples must consider their property and debt ownership carefully.  Marital property is that which was attained during the marriage. Separate property refers to property owned by only one spouse. Determining who is responsible for the marital couple’s debt works the same way. Mortgages, loans, and credit cards issued in both spouse’s names are to be paid by both spouses. Credit cards that are issued to one spouse but grant the other spouse rights to use the card, are usually only the responsibility of the spouse who was issued the card.

In a small number of states, community property and debt are divided equally among spouses. Maryland relies on the laws of equitable distribution when dividing property between divorcing couples. All assets are analyzed and then divided among the couple fairly. The judge will look at each spouse’s earning potential, along with their income and resources, and the debts they have incurred to determine how much each spouse is responsible to pay. Even though the divorce decree may stipulate individual obligations, creditors can still demand payment from each person.

Legal Counsel and Mediation Can Avoid Court Decisions

Couples that can amicably decide how to divide the marital property and debt can avoid court involvement. Those that fail to come to amicable decisions can first try mediation where an objective third party attempts to help the couple reach an amicable decision. When this fails, the couple must rely on the court’s decision.  An experienced divorce lawyer can help couples struggling to make decisions avoid the costs and stress involved with court ordered decisions.

Towson Divorce Lawyers at Huesman, Jones & Miles, LLC Provide Legal Counsel and Representation to Divorcing Clients

If you or someone you know is considering a divorce, the experienced Towson divorce lawyers at Huesman, Jones & Miles, LLC can help. Call us at 443-589-0150 or contact us online to schedule a consultation today. Our offices are conveniently located in Hunt Valley and Towson, Maryland to serve clients throughout the state.

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