Incurring new debts after you decide to file for divorce may complicate the process of determining liability. With respect to loans, the only person responsible is the one who signs the contract. However, in the case of joint credit cards, you may have to close all existing accounts. Each person then opens their own individual accounts. This option may not be feasible for those who travel frequently for work or if there are automatic monthly payments attached to those credit cards.
Avoiding Problems with Liabilities Prior to Divorce Settlement
Where liabilities exist, divorce often creates problems. The simplest solution is for you as a couple to agree in advance how you will separate the liabilities until the court issues the final decree. You must present this information to your respective lawyers to include it as part of your divorce settlement. This assessment at the outset will make it easier to separate liabilities later when you assume those belonging to you. Separating any new debts as they occur will help to:
- Create a listing of the debts that belong to each party when visiting the divorce lawyer
- Make it easier to assess the ability of each party to pay a portion of the debts as it relates to the marital and individual assets
- Make assessing individual debts simpler when you decide to refinance loans, so you only carry debts that belong to you as an individual
- Present an assessment from each party showing the lawyer a breakdown of whose debts belong to whom.
“I often advise people if they can take control of their lives and of this process and come to their own agreement, they can fashion much better and a more detailed divorce arrangement or agreement than they will get from the court, typically.”—Attorney Michael Hashim, Hashim and Spinola
82 Wendell Avenue, Pittsfield, Massachusetts
Agree on Any New Liabilities Pertaining to Your Children
Separating liabilities early on can be troublesome if you are not careful. New debts pertaining to the children become especially complicated. Agree upon which of you will be responsible for any new liabilities that relate to the children. Will it be you, your partner, divided evenly, or according to ability to pay? Therefore, many divorcing couples choose to close all existing accounts and apply for new credit on their own. As stated earlier, problems may occur if either of you travels substantially for work and must wait for reimbursement.
Work Together to Come to a Separation Agreement
Divorce is seldom easy, but to see positive results, you must work with your spouse. To make an accurate accounting of everything, you need to look not only at new liabilities, but also any new sources of income and assets.
One can easily determine liability for credit card purchases by the date and signature on the receipts. Liability for any new loans falls to the person who signed the contract. Once the divorce papers are ready to file with the court, arrange to pay any liabilities you incurred after the separation.
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