Both your property and your debts can contribute to your conflict with your spouse in the early stages of divorce. Many couples struggle to separate their finances, especially if they do not have a pre-existing marital agreement. Often, valuable property is what instigates conflict between spouses.
Marital debts can also cause a lot of conflict between spouses negotiating terms for property settlement matters. Any amount that you owe that originated during the marriage could potentially come into play during property division negotiations.
The three kinds of debt below often provoke very intense responses during divorces.
1. Student loan debt
Unlike many other kinds of debt, student loan debt is almost always in the name of one spouse. However, if the student loans originated during the marriage, they will still be part of the marital estate.
One spouse taking on debt in an attempt to increase their earning potential and better support the household will affect how they will divide their debts during their divorce process. Student loans can be worth tens of thousands of dollars and can provoke angry responses from the spouses who feel like they should not have to help pay such accounts.
2. Credit card debt
Some people are far more irresponsible with revolving credit than others. In fact, different spending habits could be a major contributor to the decline of your marital relationship.
If your spouse has always had an attitude of preferring instant gratification over saving to buy something when they can truly afford it, you might resent the obligation to help pay your credit card debts. With the exception of debts taken on to spite the other spouse, diminish the marital estate or conduct an affair, most credit card debt will be subject to division in a divorce.
3. Secured loans
A secured loan has collateral property attached. Mortgages and vehicle loans can lead to intense negotiations in a divorce, in no small part because of the expense potentially involved in refinancing. There may also be concerns about how to share the equity in the collateral property. Refinancing secured loans is often a necessary step, just like the division of unsecured debts.
Understanding what debts you may have to divide can lead to more successful property division negotiations in the early stages of a divorce.