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Tips for dealing with debt in a divorce

On Behalf of | Jan 12, 2021 | Property Division

If you are considering getting a divorce in Maryland, you may be concerned about property division. However, you may not have thought about what to do about debt, and this can cause even more issues than dividing assets.

Check your credit

Your first step should be to get a copy of your credit report. You can review all of your accounts as well as the ones you share with your spouse. You may want to try to close any joint accounts although you will usually need to do this with your spouse. Next, you need to decide what you are going to do about shared debt.

Paying the debt

Ideally, you could pay off the debt before the divorce. This is the easiest way to deal with it, but it may not be possible. The next easiest approach might seem like dividing the debt the same way you would divide property, but there are actually pitfalls here. You will have to rely on your former spouse to stick to the divorce agreement, and if the debt is in your name and they do not pay their share, creditors can come to you for the balance.

Other negotiations

A better approach may be for one of you to take on more of the debt as well as more assets in order to make up for having to repay the debt. One advantage to negotiating property and debt division instead of going to court is that it may be easier to reach an agreement like this that suits both of you.

When dividing debt during a divorce in this way, it is important to calculate the true value of the property. This means taking into account how much it is likely to appreciate as well as any taxes or other costs associated with it.

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