The end of a marriage brings a number of changes. One prime example lies in one’s financial standing in the years following divorce. In some cases, the outcome of the property division process is financially disastrous, leaving a Maryland resident in need of bankruptcy protection. This is due to the fact that property division includes the division of not only marital assets but marital debt, as well.
For those in Maryland who are preparing to divorce, it may be possible to alleviate debt issues by using marital assets to pay down outstanding debt before the divorce is made final. This approach also gives spouses the ability to walk away from the marriage with a clear picture of what each party owes. When one spouse assumes responsibility for a given account, the best course of action is to have the other spouse’s name removed from that debt.
One way to accomplish this is for the spouse who is assuming a given account to open a new line of credit and transfer the entire balance of the debt in question into that account. This removes all repayment obligation from the other spouse. This is important, because creditors do not care what agreement has been reached between spouses; the individuals listed on the account are held jointly responsible for the balance owed.
In some cases, there is such a high level of debt that needs to be divided within a Maryland divorce that repayment is simply not an option. This can be especially true when there were relatively few assets to divide. Divorce can take a huge financial toll, and many newly single spouses seek bankruptcy protection as part of the process of rebuilding their financial future.
Source: Fox Business, “Debt and Divorce: 5 Steps to Make a Clean Credit Split”, Dawn Papandrea, July 14, 2014