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How do we allocate debts in a divorce?

Securing the correct deal when dividing assets in a divorce is crucial to ensure you do not start your new life broke. Yet, if you only focus on what you want, you could end up saddled with things you do not want.

While you prefer your spouse to take all the debts in a divorce, chances are this will not be possible. Courts treat debts in the same manner as assets. If they consider them community property, you must split them.

How can you reduce the chance you leave a divorce saddle with debts?

 Here are some things you can do to relieve yourself of debts in a divorce:

  • Prove they are separate property: If you can show that your spouse had the debt before marrying, then you should escape responsibility. A court should consider things such as student loans or premarital medical expenses as separate property.
  • Negotiate them as part of the settlement: When dividing property, you need to look at the total of community debts minus the sum of community debts. If you take on your partner’s share of debt, make sure you get an equivalent amount of assets to make up for it.
  • Sell the items the loans fund: One of your largest debts will be your mortgage. If you sell the house, you can clear it. Or, if your spouse wishes to keep the property, transfer the mortgage into their name. Then if they fail to make repayments, it will not harm your credit rating.

When dividing debts, make sure your spouse has not incurred extra debts to spite you. If they reacted to you filing for divorce by maxing out the joint credit card, you could ask a judge to allocate that debt to your spouse alone.

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