Sjoberg & Tebelius, P.A.
Serving Minnesota & Western Wisconsin
651-315-8856

Don't forget about your debt during divorce

credit card.jpgPhoto cred: Michal Jarmoluk

Millions of Americans carry some amount of debt, whether it's the result of student loans, medical bills, or credit card payments. Despite the fact that so many people have debt, it can be easy to forget about when it comes to dividing property during a divorce.

In addition to the division of assets, you will also need to address liabilities--both marital and personal--in your Minnesota divorce. Below are a few key things to remember about how debt will affect your divorce.

You must categorize the debt

Debt can be personal or marital, and you must categorize all your debts as one or the other. It is not always as easy as it sounds. Some debts might be obviously personal or obviously marital, but others are more convoluted. For example, if it is your name on the car loan, it is your debt, even if your ex-spouse maintains possession and control of the car itself.

Marital debts will be subject to distribution

The distribution of marital debt looks very similar to the distribution of marital property during a divorce; namely, it will be divided in a manner deemed fair and equitable. For instance, you might be responsible for more debt in exchange for keeping high-value property. Or, you might not have to worry about any debt payments if you are at a significant financial disadvantage after the divorce. It is a balancing game of making sure the liabilities are in line with the assets.

Problems can still arise after the debt is divided

You and your ex-spouse might spend years paying off credit cards, car payments, and other types of debt. Just because a court has assigned a specific debt to one spouse does not mean that other party is off the hook in the eyes of the creditor. Depending on the steps you take (or do not take) to divide and reassign the debt, you could still be penalized for an ex-spouse's delinquent payments months or years down the line.

Because of the confusion regarding debt during and after a divorce, it is critical that you discuss your financial liabilities with your attorney sooner, rather than later. Doing so can shield you from considerable financial fallout and ensure you walk away with a fair divorce settlement.

No Comments

Leave a comment
Comment Information
Client Testimonials

Client Testimonials

  1. “Thank you for providing personalized professional services to us during a time of grief and loss when family relationships were not the best. With an attorney on board to help manage legal matters, everyone had confidence that the best was being done. ”

    Read More…
  2. “Our estate plan was handled well. We never felt rushed and all details were fully explained. Sam is very professional, easy to talk to and experienced in all aspects of estate planning. He gave examples and explored alternatives for us to consider. Well done and thanks.”

    Read More…
  3. “I was given the name of the law firm by a family friend after helplessly pilfering through endless names on websites. I am grateful I called. I was connected with Dave Meier immediately and from the go, was treated with dignity, care and respect. Every visit to the firm was pleasant and professional. ”

    Read More…
  4. “We were highly impressed upon the level and capability of Sjoberg & Tebelius. They gently showed us that there was much more to achieving the Will in the correct format that will protect our children than the quick attempts we had made on our own. Great people to work with - achieving our desired results!”

    Read More…

Over 30-years of experience Serving Minnesota & Western Wisconsin

Sjoberg & Tebelius, P.A.

Woodbury Office
2145 Woodlane Drive
Suite 101
Woodbury, MN 55125

Fax: 651-738-0020
Map & Directions

Minneapolis Office
900 IDS Center (By Appointment Only)
Minneapolis, MN 55402

Toll Free: 888-892-7044
Phone: 651-315-8856
Fax: 651-738-0020
Map & Directions

Map