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How to deal with debt during and after a divorce

Many factors have to be deliberated when an Iowa couple decides to end their marriage. Child custody and support, determining who keeps the house, dividing up bank accounts and changing beneficiary designations are just a few of the topics that must be addressed. One significant area that may be overlooked is how debt should be handled in a divorce.

First, it certainly matters how the state in which a person live handles marital property. Community property states consider both parties to be responsible for any debt accumulated during the marriage, regardless of who owns the account. In equitable distribution states, such as Iowa, both parties are responsible for the debt if they are joint owners of that account. However, if only one of the spouses' name is on an account, that spouse is solely responsible for the debt.

Regardless of which state one lives in, debts are divided in much the same manner as assets. Experts recommend that couples with credit card debt transfer the debt to separate accounts. Not all lenders will do this, but it is helpful to ask for their help. When there is a mortgage, things are a bit more complicated since one spouse typically decides to stay in the home and sells the home to the other spouse. Car and student loans would also need to be divided between the couple.

Debt may be an overlooked topic, yet it can have major implications on a person's finances during and following a divorce. It would be wise to contact an Iowan divorce attorney for assistance with this and every aspect of the divorce. A trusted attorney will help someone every step of the way throughout the proceedings.

Source: wisebread.com, "What Happens to Debt After Divorce?", Holly Johnson, March 30, 2018

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