Although debt is becoming less of an issue each year as individuals reduce their financial obligations, it still remains a significant problem for many couples. According to an article by The Augusta Chronicle, the division of debt has become a larger hurdle than the division of assets in many divorce proceedings in Massachusetts and elsewhere.
According to a Federal Reserve survey, the net worth of the average American family decreased by 38 percent between 2007 and 2010. Although debt levels have also consistently dropped during this time period, many divorcing couples are still faced with the task of determining which debt belongs to whom. In many cases, these obligations are divided 50/50. However, the circumstances surrounding the debt are not always so clear cut.
Although it can be a sticking point in the finalization of a divorce, couples often find it easier to divide their debt than to divide their assets. In contentious divorces, however, a judge will occasionally be required to divide the debt at their own discretion. In this case, the debt will often be given to the spouse who has less at stake if they fail to uphold their obligations.
There are many factors to take into consideration when going through a divorce. Although debt is only one of the issues that need to be addressed, it increases in importance when a couple’s debt level exceeds their actual worth. Determining what rights an individual may have in either assuming debt may play an important role in ensuring long term fiscal soundness for both parties as they prepare to start new lives.
Source: Augusta Chronicle, “Debt often focus of divorce proceedings,” Kyle Martin, Sept. 23, 2012