What is Debt Distribution?

Accurately determining all debts accrued in a marriage and fairly distributing those debts can be a challenging task. I can help you make sure all debts are accounted for and a fair distribution and separation of these debts is agreed upon. Examples of the types of debts to be considered include:

  • Mortgages
  • All family bills including credit cards
  • Installment payments
  • Personal loans
  • Student loans
  • Debts owed to the IRS or to the State of Washington

Possible Court Actions

In a divorce proceeding, the court attempts to equalize the distribution of debts and assets. Many people are unaware that even though the divorce court may assign a debt to be paid by one of the parties, if both parties names are on, for example, the mortgage loan, the original lender can still pursue collection against both parties. Commonly, debts accruing after the date of separation become each individual’s responsibility.

What are common tax issues to be considered during a divorce?

A wide range of tax considerations often emerge during the divorce process.   In some cases, there are advantages and disadvantages to filing taxes separately or jointly during the current year. There is often a need to determine how tax payments or expected tax returns will be distributed. Sometimes there is urgency to finalize a divorce in the current year in order to start the next year under the agreements of the divorce.  Specific topics with tax implications might include:

  • Capital gains on investments
  • Tax implications for sale of the family home
  • Pre and post-tax assets
  • Which parent takes exemptions for the children
  • Taxation related to withdrawals from IRAs
  • Student loan interest deductions
  • Taxes related to spousal maintenance (alimony)