What Happens to Unknown Debts in Divorce?
When a couple decides to divorce in Arizona, there are many issues that need to be resolved. The settlement terms need to be ironed out, including matters regarding the distribution of assets, and the division of debts. You may wonder, what happens to unknown debts in divorce? A couple’s assets and debts during the marriage belong to both parties. It is essential to account for all debts so they are properly assigned as part of the divorce order.
Locating All Assets and Debts
Couples need to review and provide documentation for all assets as well as debts. Debts include all types of money that may be owed. Types of debts may include a mortgage, car notes, credit card bills, and other items. These are generally considered joint debts if they were incurred during the marriage. They could also become joint debts if the couple used the items together. Each party, at a minimum, must disclose the jointly title debts and any debts in their sole name that were acquired during the marriage. It is also generally wise to run a credit report for each party to locate any previously unknown debts.
Distribution of Debts in a Divorce
Couples usually have at least some joint debts. These debts must be reviewed and made part of the court order in the divorce. The court order will provide details of which spouse is to pay which debts. The order can then be used to let creditors know how the payments will be made. However, in some cases, creditors may still try to get payments from either party. If a debt is unknown at the time of the divorce, it does not become part of the order and can be a cause for concern.
Debts that Are Not Accounted For in Divorce
If there are any debts that were not accounted for during the divorce, it is likely that both parties will still be responsible for them. These debts could become problematic if neither party makes payments, and the loan or credit card goes into default. Both parties could experience a situation that could harm their credit scores.
Finding All Debt in a Divorce
Because of the problems that can be caused, it is essential that both parties make every effort to find all potential debt before the divorce is settled. Gather information from a credit reporting company, which will provide a current look at all of the debt that is owed, and in arrears. In cases where the assets and debts are complex, a financial professional may be needed to help identify them.
If you are involved in a difficult or complex divorce, you need help from a reliable attorney. Call the experienced attorneys at Udall Shumway PLC to discuss your divorce today.
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding Unknown Debts in Divorce, or other family law issues, please feel free to contact Lindsay A.M. Olivarez at 480.461.5300, log on to udallshumway.com, or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.