Oftentimes in divorce, parties find themselves most concerned about property division. This may include discussions about who will retain possession of the family home, vehicles, retirement accounts, and even items that carry sentimental value. The process of divvying up these assets can be tedious and tiresome, but it is important because it can lay the financial foundation for one's post-divorce life. However, it is just as important that divorcing individuals recognize that debts can also play a key role in the property division process.
Making an analysis of marital debts and how it may affect an individual post-divorce can be especially significant when it comes to protecting one's credit. For example, debts that are held in an individually owned account will only affect that debtholder's credit. In other words, that account holder's credit cannot be affected by the actions or inactions of anyone else. Jointly held accounts, however, can be reported on both debtholder's credit.
This can be risky during the property division process. For example, if the parties agree that one person will take responsibility for the couple's credit card debt and the accounts are jointly owned, then his or her failure to pay on that debt can negatively affect the other's credit. This can be a prevalent issue when divorce leaves one party in financially hard times, or when the marriage is filled with negative animosity.
This is just one example of why it is important to consider every aspect of property division, including debts, before proceeding with divorce finalization. Those going through the marriage dissolution process may benefit from the assistance of a skilled family law attorney who may be able to help them strategize as to how to best protect one's interests.