Allocation of Debt
Assets and Liabilities acquired during a marriage must be included in determining your “net family property”, as of the “valuation date”, which is usually the date of separation.
You and your spouse would usually each fill out a financial statement to assist you with calculating your net family property.
To calculate your net family property, you and your spouse will each subtract the value of the debts in your own name, from the value of the assets in your own name. The difference between the two is your net family property.
However, no matter how the calculation of net family property ends up between you and your spouse, you are each still responsible to your own creditors for any debt in your name. For example, if you have a credit card in your name only and owe $5,000.00 on it, then you are solely responsible to the credit card company for repayment. If your spouse took out a car loan with a bank and you did not sign the loan agreement, then your spouse is legally responsible to the bank to pay the loan. In other words, you are not responsible to a creditor for your spouse’s debts, and vice versa.
Debts may include mortgages, car payments, credit cards, personal loans, taxes, etc.
You and your spouse can decide in a separation agreement who will be responsible for what debt, but remember that your creditors are not parties to the separation agreement. If your spouse does not pay one of your debts, as promised, the creditor will look to you for payment.
Bankruptcy and Divorce
If you or your spouse need to declare bankruptcy, and you are thinking about separating, an experienced family law lawyer can advise you on your rights and responsibilities.
The order in which you declare bankruptcy and separate, can have a tremendous financial impact on you and your separating spouse, and ultimately on your children.
It is important to work with an experienced family law lawyer to help you prepare your financial disclosure and calculate assets and debts. Call the Daly Law team to protect your rights and your future.