How Are Debt And Other Liabilities And Obligations Divided?

Debt division is considered part of the property division process. Debt, like the property, is divided equitably between the parties. If the debt is secured debt, the general rule is that the value of the encumbered asset is reduced by the amount of the debt in determining division. For instance, this often happens in the case of family cars. For many divorcing couples, each spouse has a vehicle, but one may be worth relatively little with no car payment, while the other may be a late model car worth tens of thousands of dollars, but with a loan balance equal to its present value. Despite the fact that the vehicles may have very different gross values, the net value for them is equal.

A very common problem for couples in our current economy is that they have accumulated high amounts of unsecured debt, with little asset acquisition during the marriage. This situation poses a complicated issue for debt division. In cases such as these, the advice of a financial consultant, or even a bankruptcy attorney, could be very helpful to the parties. As with other property issues, if the parties cannot come to a fair and equitable division of debt on their own, state laws typically provide a rationale for courts to follow in making debt division decisions.

Prepared. Focused. Aggressive.

For more information review our other family law FAQs, or call the Zolman Law Firm at 314-375-5237 or contact us online.