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It’s critical to know how to divide debts during a divorce

On Behalf of | Jun 17, 2022 | Divorce

If you and your spouse have chosen to get divorced in Tennessee, you’ll need to decide what to do with your home, automobile, 401(k) and other assets. Dealing with debt during a divorce is also critical as it can have long-term financial implications.

Living in a common-law state

It is essential to examine each asset and debt to determine how they should be split. Since you live in a common-law state, dividing your assets must be completed fairly during a divorce. Performing this action with the debts you hold should also be completed.

Selling your home

Deciding on what you do with your home after getting divorced is essential as you both can’t live there. One of the most significant debts you own is likely your mortgage. In some cases, one of you may want to keep it, which can be done if fair compensation is given to the spouse who moves out. However, a thorough examination will be needed if only one of you is listed on the title. This situation might occur if you or your spouse already owned the property before getting married. It can complicate the circumstances even further if there was a significant amount of equity in the property when you married.

Handling credit card debts

Credit cards can be held in your name only or jointly. If you hold a credit card in your name, you’ll likely be liable for the total amount of the debt. When held jointly, splitting the debts may be the fairest solution. However, if one of you spent considerably more for yourself using a joint credit card, it may be fairer to have that individual liable for the debt.

Getting divorced is never easy, which is why keeping a clear line of communication can be helpful. Agreeing on how to split assets and debts can make the process easier.