When a marriage ends, there are many things that have to be considered. One of these has to do with property division. What many people don’t realize is that property division is more than dividing assets.
Another primary component of property division is taking care of marital debts. There are two main options for this. Each debt can be assigned to a person or assets can be liquidated so debts can be paid. Anyone going through an Iowa divorce should learn about debts in divorce.
Division of debt in Iowa divorces
In Iowa, dividing debt during a divorce follows the principles of equitable distribution, but with its unique considerations. Iowa courts look to divide marital debts fairly, though not necessarily equally.
Impact on credit scores
Debt division may significantly impact both parties’ credit scores, even though divorce doesn’t directly affect credit reports. Creditors consider the names on the account, not the divorce decree, when determining responsibility for debt repayment. Your ex failing to pay debts as ordered can negatively affect your credit score if your name is also on the account.
To mitigate such risks, divorcing couples may opt to work towards either paying off joint debts before finalizing the divorce or refinancing debts to ensure they’re in the name of the spouse who will be responsible for them. Closing joint accounts and removing ex-spouses as authorized users on individual accounts can also help protect one’s credit from the potential financial missteps of an ex-partner.
Asset and debt division are critical in a divorce. Anyone facing this should take the time to learn the options available so they can work toward a suitable resolution as the marriage is legally ended.
