Unusual (and Effective) Ways to Divide Marital Debt

Dividing marital debt is often as challenging as dividing assets during a divorce. While there are common approaches to splitting financial obligations, there is no one-size-fits-all solution. Each couple’s financial situation is unique, requiring tailored strategies to ensure both parties can move forward successfully.

While traditional methods work for many, some divorcing couples have found more creative and effective ways to handle marital debt. A skilled West Palm Beach family attorney can help you look into all of your options so you can be sure you land on a process that aligns with your short and long-term financial goals.

Marital Debt and Ideas to Consider

A few common ways to divide debt when a marriage ends include equal division, responsibility-based determinations, and offsetting debts with assets. Equal division splits debts 50/50, which can be straightforward but may not always be fair if one spouse earns significantly more or if the debt was primarily incurred by one party.

In cases involving responsibility-based division, debts are assigned based on who incurred them. So, if one spouse racked up credit card debt on personal expenses, they may be required to take on those obligations. Or, to offset debts with assets, one spouse may receive a larger share of retirement accounts or property to balance a financial load.

While the above methods work for many, some couples have found alternative approaches that better suit their circumstances.

• Income-adjusted debt division. Instead of splitting debt equally, some couples divide it based on their post-divorce earning potential.
• Debt-swap agreements. In some cases, one spouse takes on a larger portion of the marital debt in exchange for keeping a valuable asset, such as a business or a family home. This method can simplify the divorce process and help avoid liquidation of assets.
• Structured payment plans. Rather than dividing debt immediately, couples sometimes create structured repayment plans where both parties contribute based on their means. This can be beneficial when trying to maintain financial stability and avoid credit damage.
• Third-party refinancing. Another creative approach is to consolidate marital debts into a single loan or credit account under one spouse’s name. This allows for a clean financial break, preventing ongoing financial entanglements post-divorce.
• Business-linked debt transfers. If a couple owns a business together, debt can sometimes be transferred to the business entity rather than being split personally. This option works well for couples who plan to continue running a business after divorce.

Lasting financial consequences are possible when dividing debt, making it essential to choose a method that fits your personal and financial goals.

Contact an Attorney If You Have Debt Concerns

With professional legal guidance from a West Palm Beach family attorney, you can protect your credit, secure your financial future, and move forward with confidence.

Are you unsure of how your marital debt will be handled as you move toward a separation? If you’re going through a divorce and concerned about how debt will be divided, contact experienced family lawyers at Bruce S. Rosenwater & Associates. Schedule your confidential consultation today.