During your divorce, you and your spouse will probably have a lot of decisions to make, and one of these will involve dividing the debts and assets you have. In most divorces, couples split all assets and debts equally. While this may sound simple, it actually can be very difficult to do, depending on the couple's financial situation. Here are some tips to help you with this difficult task as you work through the agreements of your divorce.
Start with the House
If you own a house, you cannot physically divide it so you can each receive half. Instead, you must decide who will get the house, and this will be the starting point for dividing the debt and value of it. In either case, you will need to know several things about the house. The first is its current value, and the second is the amount you owe on it. The difference in these two amounts is the equity in the house.
For example, if your house is worth $180,000 and you owe $100,000 on it, there is $80,000 of equity in the house. The goal in your divorce is to make sure each party gets their fair share of the equity in the house.
To do this, the person that keeps the house will inherit the house and the entire loan owed on the house; however, the other spouse will be entitled to half of the equity. In this situation, the spouse that does not get the house will be entitled to $40,000.
If you are the spouse that is keeping the house, you will need to pay your spouse $40,000 if you want to keep the house. If you are not keeping the house, your spouse will need to pay you $40,000 for your share.
Move on to the Vehicles
Splitting vehicles is not nearly as hard as splitting a home, especially if you only have two cars. In this situation, each spouse will typically keep the vehicle he or she normally drives. In addition, each spouse will also keep the loan on the vehicle he or she keeps.
If you only owe money on one vehicle but own two, the situation can get more complicated. In this case, you may want to add up the values of both vehicles and subtract out the amount owed. The difference is the equity, and you could use this to determine how to divide the cars and debt on the one vehicle.
Work on the Other Debts
After this, you will need to view all other debts you have, including medical bills or credit card debts. You should add these up and divide by two to find out how much each spouse will be responsible for.
Finish by Creating a Plan
Once you take all these steps, you will know who will keep each asset, and you will know the total amount of debt each spouse is responsible for. The problem is that most debts will probably be in the names of both spouses, and this is where the situation can become more complicated.
You will need to find the best way to divide up the debts so that each party knows exactly which ones he or she must pay. In addition, you may want to look for ways to get the debts into the names of just the spouse that will be responsible to pay for the debt after the divorce, and there are several options with this.
If you have questions about how this works, check out sites like http://www.ivylawgroup.com and make sure you talk to a good divorce lawyer in your area. He or she will be able to help you work this all out to make it fair and simple.