Dividing marital assets is often one of the most complex aspects of divorce, but you’ll also need to decide who will take care of joint debts. Filing for divorce is financially stressful enough, which is why many couples decide to hire a bankruptcy attorney if they have considerable debt that needs to be divided. Here's a guide to how debt is handled during a divorce.

How Is Debt Divided During a Divorce?

When you get divorced, you and your spouse will both likely be assigned responsibility for at least some of the marital debts. Family courts will usually try to divide debts equally, but they also strive for equitable outcomes. For instance, a spouse who receives a majority of the marital assets will likely be responsible for a greater share of your joint credit cards, loans, and other debts.

However, while the divorce decree might make your ex responsible for a debt, it doesn’t remove your obligation to pay. If your ex stops making payments, the creditor can still take legal action against you for joint debt.

If the debt has become unmanageable, filing for bankruptcy is one way to regain your financial footing. Chapter 7 bankruptcy completely eliminates most unsecured debts, including credit cards, medical bills, personal loans, and even some unpaid taxes. This gives both spouses a fresh start without the weight of burdensome debt shared with your ex-partner.

In exchange for discharging your debt, the trustee of the court may seize some of your assets to pay back your creditors. Fortunately, each state allows borrowers to exempt a wide range of personal property. In many cases, divorcing couples can discharge their debts without surrendering any belongings at all.

Should You File for Bankruptcy Before Divorcing?

Having unsecured, unmanageable debt discharged before dissolving your marriage simplifies the divorce process since there won’t be financial liabilities to divide. Eliminating debts can also protect your financial future. If your spouse files for bankruptcy after the marriage is dissolved, the creditors may decide to pursue you for payment. This can harm your credit and make it more difficult to obtain credit cards or a mortgage in the future.

Filing a divorce petition also triggers an automatic freeze on your assets, which is intended to keep either party from hiding money or selling valuable belongings. If you file for divorce first, you likely won’t be able to pursue bankruptcy until the marriage is formally dissolved.

If your marriage is coming to an end, the bankruptcy attorneys at Anderson Law Firm can help you resolve any joint debt. They’ve been helping clients throughout Archdale, NC, get the relief they need and are committed to providing skilled legal counsel. Visit their website for more on their services, or call (336) 431-7336 to consult with a bankruptcy attorney.

The information contained in this site is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved.  We are a Debt Relief Agency.  We help people file for Bankruptcy Relief under the Bankruptcy Code.