Divorce Separation of Debts

Separations of Debts are one of the first things we start to separate when we have a divorce between spouses. Whether you do this as an initial splitting up of yourselves or you’ve waited till you have filed for divorce, the judge will be looking for a clean identifiable division in the couple’s assets.

How to Start

It normally works best is to start with assets and setting an initial division of these as this gives you a starting point of where to balance the debts, but you can start with debts first, if you choose. Start with an initial outline. Take a piece of paper or a spreadsheet and list everything and/or everyone you own money to (yes, I do mean everything). List the debt, how much its worth if its attached to any item (used), owed against it (debtor, monthly payment and total owed) and lastly who desires to take this debt and if it has an asset attached to the debt. Start with your standard bills (electric, gas, medical, etc.) then all property with an attached asset (house, car, boat, etc.) then personal loans (signature, credit lines, etc.)

Equability Equation

Once we have this list, we start helping you negotiate what you and your spouse want and how to best balance the equation of equitability. Equitable means fair (45/55) but does not necessarily mean equal (50/50). The assets and debts must be fair to both sides. If you take on more assets, you may have to take on more debt to balance out the equation. Always remember, when you take on an asset you will normally take on any debt associated with that asset. Judges like to see this separation so that one spouse can’t hold something over on the other. Think of it this way: If you take a car and your spouse is responsible for making the payment. If something happens to your spouse’s job and they cannot pay your payment. You’re left paying the payment or losing the asset. This is a power imbalance the courts want avoided. It can be done but judges don’t normally like to see this and may reject this plan.

A BIG NO NO!!

You can NOT use assets in leu of negotiating child visitation or child support. This is a major problem and will likely get EVERYTHING thrown out by the judge. Children and visitation can NOT be tied to property, assets or debts. PERIOD.!!

What to Consider

When you’re considering an asset, think about the debt and the payment you will be responsible to perform. Can you afford this payment without having additional help.? Will this asset make your life better or save you anything.? Do you really need this asset.? Is selling this asset to remove the debt or split the assets value a better option.? Selling off assets such as a house, car, rental property, jewelry, investment assets, etc. is sometimes a better solution for separating spouses. This creates an income to pay off debts or get started anew with rent/utility deposit money.

The Dance

Once we can get a reasonable amount of debts separated then we must do the same with assets then continue to go back and forth till we balance the asset / debt equation.