Cash Flow Planning for Life - Helping you reach your personal & professional financial goals.

Cash Flow Planning for Life

Helping you reach your personal & professional financial goals.

debt man

This is the seventh installment of “Divorce. What You Need to Think About from a Financial Perspective”, which can be downloaded for FREE from

A spouse can be held liable in a divorce for the other spouse’s debts — and it doesn’t necessarily matter whose name the debt is in. When it comes to divorce, there are two forms of debt that courts primarily consider: Living expenses & community property.

Living expenses include the cost of things like mortgage or rent, groceries, utilities, your cable or cell phone, and other, similar expenses. Community property is basically, everything else.

So, for example, if you and your spouse owe on a credit card that you’ve used primarily to pay for groceries, gas and cable, that debt is considered living expense debt.

However, if the debt on your credit card is for a new TV, appliances, exercise equipment, vacations, etc., it’s considered community property debt. In “Community Property” states, this debt is split right down the middle, regardless of who made the purchase, and whether the other person even had
knowledge of it.

Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

However, in all other states, including Florida, debt is split up by something called equitable distribution. This is where attorneys and a judge determine who owes what.

So basically, if your spouse racked up a ton of credit card debt in secret, you’re more likely to come out of your marriage not owing that money.

In most cases, debt incurred and cash received after the filing date can be traced to one of the individuals, it is not done jointly. You can try to control this date Divorceby planning the adjusting the cash position(s) or debt incurred before the filing of a petition.

This can put you in a favorable position when an agreement is reached.

Before initiating the divorce process, it is important to consult with an attorney, as well as your accountant, so you are prepared legally and financially.

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