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Debt

Tuesday, January 8, 2019

What Happens to Debt In A Divorce?


What Happens to Debt In A Divorce?

The division of marital debt is included in the property division of the judgment of divorce.  In general, debts are treated as negative assets in valuing an overall property award and courts typically allocate them according to the same equitable principles that govern property division in general.

First, the court or the parties (the married couple getting divorced) have to determine whether the debt is separate or marital.  Almost all debt incurred by either party during the marriage are considered marital debts, regardless of which party incurred the debt, even in cases where the other party may not have agreed with or directly benefited from the debt.  There are certain exceptions such as student loan debts and others regarding wrong doing (such as unreasonable gambling debts, debts incurred pursuing an affair and debts related to criminal activity).


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Tuesday, December 18, 2018

What Happens to Student Loans In A Divorce?


What Happens To Student Loans In A Divorce?

Almost every divorce case requires dividing some form of debt between the spouses.  There are secured debts, like a mortgage or vehicle loan where the loan is secured by some property that the lender can repossess.  Then there are unsecured debts such as credit card debts or medical bills. 

When it comes to secured debts, the debt usually goes to whomever is awarded that property and the value of the property is reduced by the debt.  For instance, if a car is awarded to a party, that party is responsible for paying the loan but the value of the car is reduced when it comes to determining the division of property.


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Wednesday, December 5, 2018

Should I Get Dental Work or Medical Work Done Before I File For Divorce?


Should I Get Dental Work or Medical Work Done Before I File For Divorce?

In Michigan when a couple gets divorced part of the resolution will be division of assets and debts.  Different types of debts will be treated differently.  

Secured debts (debts secured by property, for instance a car loan - if one does not pay, the loan is secured by the car and the bank will take the car) typically go with the property and the value of the property is discounted by the loan balance.  So for instance if a party is awarded a vehicle with a Kelly Blue Book value of $15,000 and there is a loan balance of $10,000, then when it comes to dividing the property that vehicle will only have a value of $5,000.  But the party that is awarded the vehicle is solely responsible for the loan.
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