The marital estate contains the property that spouses own together. They also share responsibility for debts originating during the marriage. As spouses attempt to settle property division matters, they may need to discuss their financial obligations in addition to their shared assets.
Debts can play a critical role in the property division process, and spouses who understand that role can push for the best terms possible when dividing the marital estate. What impact can marital debts have on property division proceedings?
Debts can balance asset retention
Fairly splitting marital property requires intense negotiations and a thorough review of personal holdings. In many cases, simply splitting the property is not sufficient to achieve an equitable property division outcome. Spouses may need to factor in their shared debts when trying to reach appropriate arrangements for their shared assets as well.
Assuming responsibility for a vehicle loan or credit card balances can make one spouse’s retention of valuable marital property more reasonable. In some cases, spouses may feel anxious about trusting one another to repay shared debts. They may prefer to liquidate marital assets to repay those debts instead of relying on a spouse to take responsibility after the divorce.
Occasionally, debts can also be a source of conflict, especially if one spouse insists that the other engaged in dissipation by accruing unnecessary debt with the intent to diminish the marital estate or harm the marital relationship.
Reviewing an inventory of marital assets and debts can help people prepare for property division negotiations or set goals for litigation. It can play a major role in the final outcome of property division proceedings.