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| Divorce Divides Your Debts |
By:
James Walsh |
Therefore, instead of equality, there has always been a weaker side and a stronger side.
Couples, who are on course for a divorce, initially focus on the need for a physical separation. It is only on deeper thought that the question of settling the finances, crops up. Only after several parleys between the opposing camps, the material spoils and debts are assigned mutually or enforced by the court.
Getting a fair share of the common assets is important, but understanding the short / long term implication of assigned debts is absolutely vital, because it can chip away at the trunk of your established and acquired finances. Just as the division of real estate is approached in a serious manner, so also should be the division of debts, in a divorce.
In most marriages, the assets / debts are acquired in the name of either spouse or jointly, depending upon the prevailing mood of the marriage. Happier times and excess incomes lead to showering of expensive gifts on each other and a willingness to register property / assets in each other’s name without any rhyme or reason. ‘How can I think such selfish thoughts?’ or ‘Our marriage is full of love and will weather any storm with eternal love, unlike the other broken marriages’ are stereotyped thoughts that incapacitate all reasoning.
Then, when the mood for divorce prevails, division of debts is given low priority. Debts could have been run up by either spouse before marriage; debts may have been incurred by one spouse solely on his or her own initiative and efforts (i.e. gambling, dud investments etc.); or debts due to the purchase and retention of a property, by one of the partners, in his or her own name. These are the situations when only the partner who has incurred such debt, is held responsible for its fulfilment.
Those debts which were jointly incurred during the course of marital life (i.e. joint debt) or those debts that have not been classified as being the handiwork of a single spouse are to be divided as equitably as possible. Topping this list of joint debts are the joint credit cards and joint mortgages / loans followed by joint tax returns and movable property. In all these cases, the default in paying the debt, can lead to recovery of the remaining debt from the other spouse.
Normally, the divorce court has enormous discretion in the division of debt. The judiciary establishes the facts regarding: Who incurred the debt? Who is the beneficiary of any resulting ownership? Who is in a better position to pay? Taking these factors into consideration, either partner can be directed to honour the debt in the event of mutual disagreement between the partners.
When the fragrance of love and consideration is overpowered by the acrid fumes of divorce, set your finances in order. It’s a last chance to obtain your rightful assets and assure a relatively debt free post-divorce life.
Take stock of your credit cards and their dues. Inform (jointly, if possible) the concerned credit card company of the impending divorce and your unwillingness to pay future debts, incurred by your partner (there isn’t much you can do, legally, about past debts). Cancel the cards, if necessary.
The next area is the joint bank account. Inform (jointly, if possible) the bank, about the intended split and as to who is empowered to operate the account. Close down the joint account, if you sense the possibility of secret premature withdrawals of the bank balances.
Transfer ownership of stocks / bonds. Change the beneficiaries on investments / insurance plans/ savings accounts and your legal Will.
Decide amicably and demarcate the physical possession of each and every asset / liability, generated during the course of your married life. If the partners are unable to commit on the future payments for closure of a jointly incurred debt, it is best to dispose of an asset and clear the debt.
Give your conscience its due mediating role, especially when the other spouse is financially weak or if there are children involved. Do not let a divorce rob you of your sweet memories and harden your nature.
Post divorce, you could be saddled with crippling debt. Negotiate for lower interest rates and partial waivers with the concerned agency. Dispose assets and settle the debt, if it threatens your piece of mind.
Divorce creates a new lease on life. Limit your wants and expectations. Be simple and don’t be indebted to anyone. It’s your life.
James Walsh is a freelance writer and copy editor. If you want to find out more about a solicitor managed divorce see http://www.managed-divorce.co.uk |
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