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It’s essential to know how debt is treated when divorcing

On Behalf of | Feb 14, 2022 | Divorce

If you’re getting divorced in Ohio, you’ll need to set up a plan for dividing your assets. Along with this task, you’ll be required to choose who is responsible for paying your debts after you are divorced. Going through this process correctly is vital as you don’t want to get stuck with more than your fair share. Understanding how credit card, mortgage and other debts are divided during a divorce is essential.

Credit card debt

Credit card debt is a common liability that must be divided. If you currently have outstanding debt owed to creditors and you’re getting divorced, you must determine who pays. Living in a community property state means both parties will be responsible for the debt. This is also true for joint credit card debt and cosigned credit card accounts.

Mortgage debt

One of the most significant debts you might have is a mortgage. Splitting it correctly is crucial as it could equal hundreds of thousands of dollars owed. Getting this calculation wrong by you or your partner could be devastating financially. When discussing a mortgage, it’s important to note that it is different from the title. Your mortgage reflects the money you borrowed to finance your house. If you have built equity up by making extra payments, your total debt amount will have been reduced.

Automobile loans

Owing money on an auto loan debt could get tricky if you and your partner don’t agree on splitting it. If a car is in both of your names, it creates problems. Refinancing the loan may be an option, and utilizing automatic payments that pay for the debt may be advisable. Paying off the balance as soon as possible can relieve stress and any problems you’re having. Selling the car and trying to get a fair value could also be a solution.

When possible, paying off debt before finalizing your divorce is often recommended. You’ll want to tie up all the loose ends of your financials in order to maintain a pristine credit report score.