Divorce is often an emotionally and financially complex process, and one of the most contentious aspects is determining who is responsible for paying shared debts. So who pays shared debts after a divorce? At Genus Law Group, we’re here to help you navigate these challenges with practical advice and personalized legal support. Call us today at 505-317-4455 or Contact Us through our website to discuss your case.
Community Property Laws and Debt in New Mexico
New Mexico operates under community property laws, meaning that most debts and assets acquired during the marriage are considered joint property. This includes obligations such as credit card debts, mortgages, car loans, and other liabilities. However, there are exceptions. Debts incurred before the marriage or after separation are generally considered separate and remain the sole responsibility of the individual who incurred them. Knowing which debts fall under these categories is vital for a fair and equitable resolution.
How Shared Debts Are Divided During Divorce
In New Mexico, courts strive for an equitable division of debts and assets, but equitable does not always mean equal. Factors such as the financial standing of each spouse, the purpose of the debt, and contributions to the marriage—both financial and non-financial—can influence how debts are divided. The divorce decree assigns responsibility for these debts, but it is important to note that this agreement does not remove liability with creditors. For instance, if your spouse is ordered to pay a shared credit card debt and fails to do so, creditors may still hold you accountable for the balance.
Practical Steps for Managing Debt During Divorce
Handling shared debts during a divorce requires careful planning and a clear understanding of your financial situation. Start by creating a comprehensive list of all liabilities, including joint accounts, loans, and other financial obligations. This ensures that nothing is overlooked during the division process. Closing or freezing joint accounts can prevent further charges and protect your credit. It is also wise to open separate accounts to establish financial independence. Negotiating the division of debts outside of court through mediation or a collaborative divorce process can offer more flexibility and control over the outcome compared to leaving these decisions in the hands of the court. If an agreement is reached, ensure it is documented clearly in the divorce decree.
Special attention should be given to debts tied to assets, such as mortgages or car loans. If one spouse retains ownership of an asset, they should also take on the associated debt. However, it is crucial to ensure that your name is removed from any joint obligations to avoid future liability. Even after the divorce is finalized, monitor shared accounts to ensure payments are being made as agreed. Missed payments can negatively impact your credit score, even if your ex-spouse is legally responsible for the debt.
Legal Considerations for Debt Division
A divorce decree is enforceable in court, so if your ex-spouse fails to meet their financial obligations, you have the right to seek legal action. However, creditors are not bound by the terms of the divorce decree. This is why removing your name from joint accounts and ensuring debts are assigned properly is essential.
Another important consideration is how bankruptcy could affect shared debts. If your ex-spouse files for bankruptcy after the divorce, creditors may turn to you for payment. In such cases, seeking prompt legal advice can help mitigate financial harm. Additionally, it is worth noting that student loan debt, which is typically considered separate, may require specific agreements depending on the circumstances of the marriage and divorce.
Secure Your Financial Future with Expert Legal Guidance
Dividing shared debts during a divorce is rarely straightforward, but having a knowledgeable attorney can make all the difference. At Genus Law Group, we provide personalized, compassionate legal support to help you achieve the best possible outcome for your case. Contact us today at 505-317-4455 or Contact Us through our website to schedule a consultation and take the first step toward securing your financial future.
