When you say “I do,” you might not be thinking about who will handle the bills if things don’t work out. However, understanding the difference between joint and separate debts can save you a lot of confusion during a divorce.
State laws and debt responsibility
The rules can vary between Tennessee and Mississippi, but both states consider the nuances of marital debt during divorces. Tennessee follows the equitable distribution model. This means the court divides debt fairly, though not always equally, based on each spouse’s financial situation.
Mississippi also uses equitable distribution but puts more emphasis on whether the debt benefited the marriage or one spouse used it for personal reasons.
Steps to protect yourself
Understanding and preparing for debt discussions can protect your financial health. Be sure to gather documentation for all of your debts, both joint and individual, as early as possible.
Review any prenuptial or postnuptial agreements as well, being that these documents outline debt responsibilities. Understanding your rights and responsibilities in your state may require you to consult with a legal professional. If in doubt, reaching out for help is always an option.
Navigating debt post-divorce
Once the court issues a divorce decree, adhering to the outlined responsibilities is crucial. However, creditors may still consider you liable if your name remains on joint accounts. Steps like refinancing or formally assuming debt individually can prevent future legal complications.
Take time to research your options
Making sense of the division of debt during a divorce can be quite complicated. With state-specific nuances influencing the outcome, it’s important to ensure you understand your responsibilities.
