Divorcing couples in Pennsylvania have a lot of practical issues to address. The division of their assets is often a top priority. Discussions about debt may not seem as important initially. However, debts frequently have a significant impact on the marital estate.
Decisions about marital deaths ranging from car loans and medical bills to credit card balances can affect other aspects of a divorce. Debts can also be a source of conflict during divorce negotiation. The three concerns below are among the most common.
Separating marital debts from other obligations
Not every debt owed by either spouse is automatically part of the marital estate. Under Pennsylvania property rules, most debts taken on during the marriage are part of the marital estate. Even debts in the name of one spouse may affect property division matters. That being said, some debts might be the separate responsibility of one spouse. Debts from before the marriage and debts taken on with the intent to dissipate marital property may become the sole responsibility of one spouse.
Addressing the risk of a default
When both spouses are co-signers on a loan or are equally responsible for a debt, either spouse might accept responsibility for the debt and the divorce. Unfortunately, neither creditors nor the civil courts assign much importance to family court decrees about debt. A spouse intent on avoiding their responsibilities could default on payments after accepting responsibility for certain debts. They might even file for bankruptcy. Lenders can then initiate collection activity against the other spouse.
Integrating debts into other decisions
The final major issue when addressing marital debt in a divorce is how to balance financial obligations with the distribution of property. The goal is an equitable or fair outcome. What that actually means can be vastly different from one case to the next. The extent of the marital estate and the nature of the debts that spouses need to pay can require very different solutions from one marriage to the next.
Establishing a comprehensive list of marital assets and debts is often an important early step when preparing for divorce. People who learn about Pennsylvania property division rules can use that information to negotiate or propose a reasonable settlement.