When you are going through the emotional complexities of divorce, the last thing you want to think about is the uncertainty of your financial future. It is a daunting prospect, but taking control of your assets and debts can make all the difference.
Debt, in particular, can have long-lasting effects on your life, impacting your credit score, financial stability and even your ability to secure a loan or mortgage in the future. However, by understanding how your divorce will shape your financial landscape, you can make informed decisions about your financial well-being. Here is what you need to know about debt division in a divorce.
Understanding marital debt and equitable distribution
In the U.S., marital debt refers to debts a married couple incurred during their marriage, regardless of whose name is on the account. This includes credit cards, loans, mortgages and other financial obligations. When you decide to get a divorce, these debts become subject to a fair division between you and your spouse.
In Alabama, as in most states, the court follows the “equitable distribution” principle for debt division. This means that the court will divide debts fairly between both parties. The court looks at several factors to figure out what is fair for each unique situation. These include the length of the marriage, the income and earning capacity of each spouse, their financial landscape and contributions during the marriage.
To protect yourself during debt division in your divorce, keeping detailed records of all debts and assets is crucial. Be honest about your financial situation and work with your spouse to reach an agreement if possible. Remember, knowing your rights and responsibilities can help you navigate this challenging time more smoothly.
