Most Americans today don’t agonize over accumulation of debt. In fact, according to a recent study by Pew Charitable Trusts, 8 out of 10 Americans have debt, and 85% of survey respondents indicated that they used debt to live beyond their means. As a result, most don’t give a whole lot of thought to how debt might be divided up in the event of a divorce. Understanding debt division is important; who will be left holding the bills? The Law Office of David Pedrazas has been helping families for over a decade and a half to wade through the difficult issues and we’d be happy to help get you started.
What Is Debt Division?
Debt division is not a simple equation that takes the total debt and splits it down the middle. Both debts and assets are taken into account when determining who is responsible for what debt, and even then, it’s still not a simple equation. Many factors can affect the responsibility of a particular debt, including pre-set agreements, property asset division and more. This is where a professional can provide great value, and help answer the difficult questions.
Factors that Affect Debt Division
Rules vary by state, but Utah Law dictates an equitable distribution of marital assets. Equitable is defined as fair, not necessarily equal. Fair distribution takes into consideration such factors as the length of the marriage, the age and health of the involved parties, occupations and all sources of income. This could be seen as both parties being placed back in the financial situation they were in before the start of the marriage. In the case of a short-term marriage or in long-term marriages, this could be a 50/50 split. This is open to the court’s discretion.
In most cases, property that was owned before the marriage is retained by the original owner and is not considered in the division of assets. There are exceptions here as well, such as the property being combined in with other marital property or used in a manner that it takes the status of marital property.
The following are general areas that are considered in relation to distribution:
- Premarital agreements: These can affect asset division, however the only areas they cannot affect are child support, child expenses or health care insurance, or child care expenses.
- Real property is defined as land and anything permanently attached such as a home. The typical division of real property involves the sale of the property and an equal division of the money from the sale. In some cases, a person is permitted to buy out the other person. In other words, in lieu of selling the property and splitting the money, one could keep the property and give the other their share of what the profits would have been in the case of a sale.
- Personal property is defined as anything moveable, such as vehicles, furniture, jewelry, tools, household items etc. Typically, each party sets up their own home and divides fairly. In the event that there are two of something, each just takes one. Property that contains a legal title will most likely be considered marital property, even if only one person is on the title.
- Retirement plan and pension benefits. As a general rule, anything contributed to one of these types of plans during the marriage is considered marital property. In Utah, oftentimes the person who holds the plan will get to keep it, but must contribute what the equal value would have been to the other party. In the event that there are no cash or property assets, the plan may have to be split.
Contact Salt Lake City Debt Division Attorney David Pedrazas
If you are in need of legal representation, The Law Office of David Pedrazas would love to help! Along with helping with debt division, we provide services in the areas of family law, child custody, child support, divorce, DUI and more. To schedule your free 30-minute consultation, call 801-263-7078 today contact us here.