Money issues are one of the most common reasons couples divorce— which means hashing out who's responsible for what debts can be one of the most contentious parts of the divorce process. Luckily the lawyers at Lebovitz Law, LLC have experience with Maryland laws, and can help you determine which debts are whose responsibility.
Equitable Property Laws Explained
Maryland is one of the "equitable property" states, meaning that any property acquired during the marriage will be divided equally between the two spouses. Assets and debts will be treated as marital, i.e.: shared property, unless either spouse can present proof that it belongs to one spouse alone.
So, what counts as marital property? Here's a brief overview:
Marital Property: all income accrued during the marriage and everything purchased with that money; all debts incurred i.e.: mortgage, car loan, student loan, unless the creditor only considered the separate property of one spouse for payment and payments were made entirely from one spouse's separate funds.
Non-marital Property: gifts and inheritances given just to one spouse; personal injury awards received by only one spouse; anything purchased with separate funds of just one spouse; a business owned by one spouse before the marriage (although a portion of it may count as marital property if the business increased in value during the marriage or both spouses worked for the business).
Mixed: anything purchased with a combination of joint and separate money is part marital property and part non-marital property, though there must be provable record that separate, i.e.: personal funds were used. Generally, this is treated as marital property unless provable otherwise.
Assigning Responsibility for Debt During Divorce in Maryland
Obviously, what constitutes marital property may be less cut-and-dry than the list above may make it seem, especially if one spouse makes more money than the other. Since things can get murky when you move away from dividing up physical property and into the realm of dividing up debt, you will want experienced and trustworthy lawyers in your corner. The attorneys at Lebovitz Law, LLC can help you determine what is and what is not martial property. We will prepare a joint property statement or 9-207 form for the court on your behalf.
One thing to consider is that no matter how a court divides up responsibility for a debt during a divorce in Maryland, there's a third party involved: the bank that holds the loan. In their eyes, the contract you signed with them supersedes a divorce decree. For example, if you took out a loan in your name with the agreement that your partner would pay it, then even if your spouse agrees they're responsible, as far as the creditor is concerned, the debt is in your name, so you're responsible to pay it.
You'll also want to be sure to close any joint accounts as soon as possible during or immediately following the divorce. Either spouse could transfer debt to a joint line of credit that's been left open, or use the card to make purchases that become the other's responsibility. If you're an authorized user on your spouse's credit card, lapsed payments can affect your credit score as well since that account will be on your credit report. Luckily, those are typically resolved with a phone call or even the credit card's website.
Steps Toward Protecting Yourself and Your Assets
Keeping separate assets from your spouse is one of the most surefire ways to protect your money, but it's not always easy to do, especially if you didn't begin before the divorce. Signing a prenup ensures you will leave the marriage with everything you brought into it and outlines how marital property will be divided. A post-nuptial agreement offers the same protections, but if you are already beginning divorce proceedings, it may be questioned in court.
Both of these agreements help keep your assets separate from your spouse's, but they may not offer much protection from responsibility for shared debt during a divorce in Maryland. Investing in protected accounts is an additional step you can take, not only to keep your money secure, but to have a buffer in the event that your spouse's debt does become your responsibility. Having a trust or investment portfolio to dip into is a precaution you may find yourself extremely grateful you took.
One last potential complication to be aware of is the chance of your former spouse filing for bankruptcy. If you have joint debt with your spouse and they file for bankruptcy, instead of erasing the debt completely, the bank will instead turn to you for payment. In other words, bankruptcy only eliminates the liability of the person who files for it. In situations like this, it's best to have a skilled attorney on your side who can advise you on the best way to proceed, both in and out of court.
Get Help with Dividing Debt During a Divorce in Maryland from The Attorneys at Lebovitz Law, LLC
Whether you are searching for an experienced lawyer to assist with your divorce, negotiating child support in Maryland or other issues, The attorneys at Lebovitz Law, LLC can help. To learn more about how we can assist you, please contact us today.