Divorce is never easy. Creating two separate lives from what was considered one entity for so long is a long and frustrating process. Family dinners give way to custody arrangements and shuttling the kids back and forth. Banks accounts are separated and the business of deciding who will get what becomes a paramount order of business when dividing property and debts.

If your separation has been harmonious, the nightmare of dividing all of your marital assets may not be as long lived as what it might be for a former couple whose split has been acrimonious.

The goal, of course, is for you the two of you to come to an agreement that works for both of you. However, it is important to bear in mind that all assets remain community property until a judge finalizes your order. That goes for debts too.

When dividing property and debt, it is advisable to create an agreement that divides everything equally, so that each party leaves the marriage with roughly the same value of property (and debt). Dividing your property does not necessarily mean a physical division.

Consider the following: If you and your partner have two joint bank accounts, it’s not necessary to split one account and then the next. Instead, it would make more sense to check the balance of both accounts and take inventory of which one has more and which account has less. If one account has a substantially higher balance than the other, perhaps you could keep the larger account and your partner could keep the smaller account along with an asset that adds up to what’s in your account.


How to Divide Your Property

The best course of action when trying to decide how to divide your property and debts is to make a list of everything that you own and all debts accumulated during the marriage. The next step is to figure out which items are individual property, which are community property and then determine the fair market value of each item.

These are steps you’ll need to take to have your divorce granted anyway, so it’s better to be on the same page with your former spouse from the beginning. During the divorce process you’ll be required to fill out a Schedule of Assets and Debts. This document is one of the forms you and your spouse must fill out in the financial declarations of disclosure sections, which is required for all divorces and legal separations.

The most important thing to remember during this process is to be honest in the evaluation of your situation. During a divorce, hiding items of value can hold serious penalties.

Once all of the proper forms have been completed, it might be helpful to sit down with your partner and discuss the following:

  • Do you disagree about whether something is community or separate; and
  • Is there a huge discrepancy in  how you each value the community property.

These two simple questions can help you decide if your case can be settled outside of court or if you need to go to trial.


Dividing Debt

Dividing debt is one of the primary ways that divorce can have a lasting impact on your life. Proceed with extreme awareness and caution. Don’t be bullied into accepting more of your fair share or playing the martyr.

Simply dividing community debts in half, for example, is not always the best idea. In theory, yes, it seems fair. Partners cut the amount owed down the middle with one party taking all the credit card debt and the other accepting the remaining amount. This may be in the written agreement. But what you need to remember is that that making informal agreements to pay off debts your debtors are not required to honor that agreement. Regardless of which party is responsible for the debt, if you signed for a loan or application, the debtor can go after either partner.

For example, if your spouse has a credit card in her name but you have graciously agreed to pay off the balance, the card company can still go after your spouse, and vice versa. If a card were in your name but you and your spouse had come to the understanding that she would handle the debt, it’s still within the debtor’s rights to try to get payment from you. From their perspective, it doesn’t matter who pays the debt so long as it gets paid. Think about it like this: should your soon to be ex default on a payment arrangement, no matter what your debt agreement was during the divorce, you are responsible. You could end up having to pay the balance, late fees and a damaged credit score.

To avoid these potential problems with dividing debt, consider:

  • If there is real property to be sold partners sometimes agree to pay the credit cards using monies from the sale of  that property.
  • Another option is the party who agreed to pay the joint credit card must get a new credit card in only his or her name and then pursue a balance transfer.


Problems on the Horizon

Once all of the property and debt has been divided either through a marital settlement agreement (MSA) or a court judgment specifying who gets what, there’s a possibility that you may need to follow a few more steps to obtain the divorce should your former spouse or partner not cooperate with the process.

If your marital settlement agreement (MSA) was “merged” or “incorporated” into the judgment, then it can be enforced like any other family law money judgment.

However, if your MSA was not merged or incorporated into your judgment, the document is treated like a contract and not a judgment. What this means is that the courts, you or your lawyer cannot enforce it as a money judgment. If, at that point, you are determined to enforce any of the terms in the document you may be forced to file a civil case for breach of contract and get a judgment through that civil case.


Mediation as Another Option

Mediation may offer another avenue of problem solving before you head down the road where litigators and long-drawn out lawsuits become a necessity. Mediation exists as an option to help solve disagreements about money issues and how to divide your property. Private mediators are available for hire in every state and are often a great asset in helping to work out a fair way to divide your property and debts. Many courts also offer a mediation service. Do some research and find out how the process works in your city.

When dealing with the separation of property and debt, it’s important to understand just what you’re getting into. Go into the process with your eyes open. Try to be fair, but remember that you also need to be fair to yourself.

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