Making The Complex

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Addressing marital debt in divorce

Dividing up property is a given when going through a divorce, but what about debt? Debt is also divided between two spouses during divorce. Taking into account that Americans have approximately $14 trillion in household debt, marital debt is something that divorcing couples need to be prepared to handle.

Louisiana is a community property state, meaning that — with a few exceptions — everything acquired during marriage is considered marital property. This includes debt. Regardless of which spouse signed up for a credit card, took out a personal loan or borrowed money for school, debts are jointly owned by both parties.

Divorcing couples have one of two choices for dividing debts. They can either decide how to split up responsibility themselves, or go before a judge who will make the decision for them. Regardless of who a divorce decree says is responsible for repaying a certain debt, creditors can still go after anyone whose name is on the debt. This means that if a husband is responsible for paying off a credit card debt in his wife’s name, it will be her credit score that takes the hit if he stops paying, not his own.

Including an indemnity clause in a divorce agreement can be a sensible approach for a couple dividing up marital debt. An indemnity clause can protect one party if the other stops paying his or her court-ordered debts, especially if most of the debts are in just one person’s name. Louisiana couples must also be prepared to handle complicated debts, such as mortgages, medical bills and more.


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