Please note that these answers are not legal advice. If you’re in need of legal advice or a lawyer please visit our Expert Guide

Dividing debt and assets during a divorce can be one of the most complicated parts of the process. Here’s a step-by-step guide to make it as fair and straightforward as possible.

Understand the Difference: Marital vs. Separate Property

Marital Property: Includes all assets and debts acquired during the marriage—even if only one person’s name is on the title.
Separate Property: Includes assets and debts acquired before the marriage, inheritances, or gifts specifically given to one spouse.

Example: If you bought a car together during your marriage, it’s marital property. If you owned a car before you married, it’s separate property—unless you both paid for it during the marriage.

Make a Complete List of Assets and Debts

Assets:
- Home and real estate
- Cars, boats, and recreational vehicles
- Bank accounts (savings, checking)
- Investments (stocks, bonds, retirement accounts)
- Personal property (furniture, jewelry, electronics)
- Businesses and business assets
Debts:
- Mortgage
- Car loans
- Credit card debt
- Student loans
- Personal loans
- Medical bills

💡 Tip: Collect recent statements and appraisals for accurate valuations.

Decide on Valuation Methods

For real estate: Hire a professional appraiser.
For vehicles: Use Kelley Blue Book or Edmunds for market value.
For personal property: If valuable, consider a professional valuation.
For investments and retirement accounts: Obtain up-to-date statements.

Determine How Assets Will Be Divided

This is based on your state’s property laws:

Community Property States (9 States)
- Assets and debts are split 50/50.
- Examples: California, Texas, Arizona.
Equitable Distribution States (41 States)
- Assets and debts are divided fairly but not always equally.
- Courts consider factors like each spouse’s income, contributions, and future needs.

Options for Division

Buyout: One spouse can buy out the other’s share (e.g., keeping the house in exchange for more savings or investments).
Sell and Split: Sell the asset and divide the proceeds.
Trade-Offs: One spouse takes the house, and the other takes equivalent value in cash or investments.
Co-Ownership (Temporary): For properties or businesses, sometimes co-ownership is maintained for a set period.

Dividing Debt: Who’s Responsible?

Joint Debts: If you both signed for the loan, you’re both legally responsible—even if one of you agrees to pay.
Individual Debts: Credit cards or loans only in your name are typically your responsibility.
Refinancing: If one person keeps the house or car, refinancing removes the other from the loan.

⚠️ Important: Even if your divorce decree says your ex is responsible for a debt, creditors can still come after you if your name is on it.

Mediation or Legal Intervention

If you and your ex can’t agree, mediation can help you find middle ground.
If mediation fails, the court will make decisions based on the best interests of both parties.

Example Scenario:

You and your ex own a home, two cars, and share $20,000 in credit card debt. You agree that you will keep the house and refinance it in your name, while your ex keeps one car and you keep the other. You split the credit card debt 50/50 and put it in writing in the divorce settlement.

Get more info with The Divorce Guide →

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