The Truth About Dealing With Your Debts in Your Separation or Divorce!

The Truth About Dealing With Your Debts In Your Separation or Divorce!

It’s a fact of life that most people, unfortunately, have debts.

However, what happens to your debts in your separation or divorce?

You deal with your debts in several ways in your separation or divorce.

When you are married, you are allowed to deduct the amount of your debts on the date of separation from the value of your assets when you are calculating your net worth for purpose of dealing with the property claims in your separation.

However, you are still legally responsible for your own debts even though you can deduct this amount from the value of your assets.  For example, if you owe $10,000 on your Visa credit card, you still owe that money to Visa regardless of your separation or divorce.

A separation or divorce does not make any difference to third party lenders, such as banks and credit card companies.

You can undertake to pay your spouse’s particular debt, such as a loan, in a separation agreement or court settlement.  However, the third party lender will still pursue your spouse for that debt if that debt is getting paid off since that debt is still legally in your spouse’s name.

It is a serious misconception or myth that your spouse is responsible for half of your debt when a relationship ends.  Each person is still legally responsible for paying their own debts regardless of a separation or divorce.

As I mentioned, you can agree to pay your spouse’s particular debt in a separation agreement or court settlement.  However, this agreement is only between you and your spouse.  A third party lender is not bound by this agreement.

If you are not paying this debt, the third party lender would still pursue your spouse for paying that debt since that debt is still legally in their name.  However, your spouse could then legally pursue you for paying that debt since you are not paying this debt pursuant to the terms of your separation agreement or court settlement.

When you and your spouse have joint debts, such as a mortgage on your home, you are both legally responsible for paying that debt.

When a spouse buys out the interest of the other spouse in the home, a common term in the written agreement is that the spouse must refinance the mortgage so that the current mortgage is paid off and the other spouse is no longer on that mortgage.  In other words, the other spouse no longer has any legal responsibility for paying off a mortgage on that home.

This also applies to people living in common-law relationships so that each spouse is legally responsible for paying their own debts and both spouses are both legally responsible for paying off any joint debts, such as a mortgage on a home.

Make sure you spend some time with your family lawyer discussing this important issue in your separation or divorce.

If you have any questions about your separation, divorce or family law case and you would like our help, there’s a few ways to contact our office.  You can leave a message on my Facebook law office page or call me directly at 905-434-8837.  We would be happy to speak to you.

Oh, by the way, did you know you can protect your family law rights and get essential information on settling your family law issues with your former spouse with the daily indispensable family law advice and tips at my FREE Facebook group?

Click here to find out more: Durham Region Separation and Divorce Legal Support Group