When a couple gets married, they often picture a happy future complete with a white picket fence and a sense of financial security. But if the marriage ends, a lagging economy can turn that future into a foreclosure sign on the lawn and a mountain of shared debt.
In recent years the property division element of divorce process has begun to focus more on a couple's debt than on their assets. The transition has been gradual but debt has consistently played a starring role in divorce proceedings since about 2009.
American households are seeing smaller and smaller debts but many continue to struggle with money. Between 2007 and 2010, the median family's net worth dropped from $126,400 to $77,300, a 38 percent decrease. Less money to go around can lead to serious bills at the end of marriage. Common types of debt seen in divorce proceedings include student loans, mortgages, car loans and credit card debt.
One benefit to the growing role of debt in divorce is its ability to cool heads during negotiations. Though the marriage is ending, knowing that they must work together to tackle debt can be unifying for a splitting couple.
This is especially true in uncontested divorce, when both parties agree upon how to split up debt and a judge typically approves it. If the parties cannot reach an agreement, their judge will decide who must pay for what.
Whether a divorce is amicable or contentious, it is important to consider your best personal and financial interests. A qualified family law attorney can help you evaluate your options and represent those interests throughout the dissolution.
Source: The Augusta Chronicle, "Debt often focus of divorce proceedings," Kyle Martin, Sep. 23, 2012