Virginia residents getting divorced will have to divide not only their assets, but any debt jointly incurred. Not all debt, however, is dealt with in the same manner, and as an equitable distribution state, Virginia courts seek a fair division of debt, based on each person’s situation and ability to pay.
The family home
One of the biggest assets couples will need to decide about during the end of the marriage is the family home. Often, the home might still not be fully paid off so there might be mortgage payments to deal with. When it comes to the family home, it is important to understand that who owns the home might not necessarily be responsible for paying for it. Deciding what to do with this debt will involve figuring out who is keeping the home. Options for dealing with mortgages include:
- One spouse buys the other spouse’s share of the home.
- One spouse refinances the home in their name only.
- Spouses sell the home and split the proceeds after the mortgage is paid off.
Other types of debts
When thinking about how to divide debt during a divorce, you have to look at each specific type of debt. Joint or co-signed credit cards, for example, are the responsibility of both spouses so a judge might decide what share each should pay. Similarly, jointly-held car loans are the responsibility of both spouses and usually, if one spouse decides to keep the car, that spouse should pay the loans because if the other spouse fails to do so, it will affect both spouses’ credit history.
In the end, most lenders will not really be concerned with divorce but with the debt being paid. It is important to keep clear records and have everything in writing, particularly when the division of debt is part of the divorce decree, in case you need to go back to court later.