Effects of Divorce: Determination of Liability for New Debts

One of the most difficult tasks that surround divorce is determining liability for any new debts that enter the picture after a couple decides to divorce. While the process is easy enough when it comes to actual loans—only the person who signs the contract is responsible—it can be much more difficult when it comes to credit cards you already have in your possession. While the perfect scenario is to close the existing accounts and open new ones in each individual name, this may not be feasible for those who do a great deal of traveling with business or when there may be automatic payments that come through on a monthly basis for various expenses. rnThe effects of divorce can make things very complicated when it comes to liabilities. It is important to decide early on how to separate those liabilities until the divorce is final; you will need to present this accounting to your lawyer to include as part of the settlement. It will also make it much easier when you attempt to separate the debts at a later date in order to assume those that belong to you. By separating any new debts as they occur, you will be able to do the following: • Provide an accounting of what debts belong to whom when you visit the divorce lawyer. • Easier assessment of how the assets and liabilities match to each of the party's ability to pay. • Easier assessment of individual debts if you make the decision to refinance loans in order to carry those debts that are yours individuallyrn• Helps the lawyer get a clearer picture of who owes what Separating liabilities at an early stage can become complicated if you aren't careful, especially if any of those new debts relate to the children. You need to determine who will be responsible for new liabilities that relate to the children: yours, his or shared. This is one of the reasons many couples that decide to divorce agree to close any existing accounts and open new ones in their individual names. Of course, this can create problems as noted above if either of you does a great deal of traveling for work and must wait for reimbursement. There is no easy way around the effects of divorce, and if it is going to work positively for you, it is essential for you to be willing to work together with your spouse. It is also important to consider not just new liabilities but also new sources of income and assets in order to maintain a separate accounting of those as well. When it pertains to credit cards, it is pretty easy to ascertain: the date and signature on the receipt is proof enough for determination of liability. The liability for any new loans falls on the person who signs the contract. Once the divorce papers are completed and ready to be presented to the court you should make arrangements to assume your portion of any liabilities you created after your separation.