Going through a divorce means you and your ex have to divide all assets during the property division process. Many people don’t realize that they also have to divide all the debts.
It’s critical to remember that how debts are handled can have a major impact on your future financial situation. Remembering these two facts about debts in divorce may help you decide what to do.
Assets can be sold off to pay debts
Assets can sometimes be sold off to pay for debts. If there are enough assets to cover all the debts, you and your ex will both have a fresh financial start once the divorce is finalized. In some cases, there may also be funds or assets left after the others are sold off. If that’s the case, those assets or funds will be divided.
Debts remaining are assigned to someone to pay
If debts aren’t paid off during the property division process, they will have to be paid. Each debt is assigned to a person during the property division process. Creditors aren’t a party in the divorce, so they don’t have to abide by the debt division order. This means that they can turn to both parties for payment. Unpaid debts may be reported on each person’s credit report.
Going through the property division process can be challenging, particularly if there are considerable assets or debts. It may be beneficial for you to work with someone familiar with these matters so they can assist you with determining how to proceed.