17 Sep Splitting Debts in a Divorce Settlement
In the case of splitting debts in a divorce, the key principle to remember is that any agreement reached involving the assignment of a debt is binding between the spouses, but generally does not extend to creditors. A proper divorce settlement will take several factors into account, such as when the debt was acquired, the names on the debt account and how ownership of the asset associated with the debt – for example, a vehicle – is structured. In general, if the credit of both spouses was used to acquire the debt, or both spouses are named on the credit application, the creditor will have the right to pursue either spouse for the debt, regardless of who the debt is assigned to in a divorce agreement or judgment. This is a very important issue that, if not handled properly, can distort the overall division of assets and debts. An experienced Family Law attorney will evaluate all of the community – and separate – property, including debts, to determine the best way to divide things.