Family Law

Preparing for Divorce Step 2B - Determine what you owe

By Jennifer Rice, Esq.

Here is part of a second post in a series about preparing for divorce. Divorce attorney Michael Sherman of the Alabama Family Law Blog has tips on family finances. I've added my comments in italics.

Step 2B - Determine what you owe

We are still on Step 2 of Preparing for a Divorce. Step 2 is "make an accounting of the family finances." We've discussed determining what you own. This step requires you to determine what you owe.

You will need to make a determination of all of the debts of the marriage without respect to the name in which it was incurred. The Judgment of Divorce will need to address who is responsible for the debt whether it is in your name, your spouse's name, or joint names. In Colorado, your Separation Agreement or Final Orders will address who is responsible for each part of the marital debt. Generally, any debt incurred during the marriage, no matter in whose name, is considered marital debt.

I recommend that each of my clients obtain a copy of their credit report. This allows you to make sure that you know of all of the debt that is in your name. It is not unusual for a spouse to have incurred debt in the other spouse's name without their knowledge. If that has happened, you need to know it before the divorce is final, not after. We often recommend that you obtain a copy of your credit report. Unfortunately, because of privacy issues, you will only be able to see any items on your report or that are jointly in your name ? you will not be able to request your spouse?s credit report (showing accounts only in their name) without a release or Court Authorization for Financial Disclosure.

There are many ways to obtain a copy of your credit report. You can request a free copy once per year at www.annualcreditreport.com. Colorado residents can get a copy of their credit report for free one (1) time per year. Go to www.experian.com, www.transunion.com, or www.equifax.com. In theory, each credit reporting bureau should have the same report for you. This is not always the case since some creditors only report to certain credit bureaus (for example, to Experian but not Equifax). We recommend that you request one credit bureaus?s report, review it, request that it be fixed or corrected if necessary. Then a few months later after any errors should have been corrected, request the second report and so on.

Once you see what all debt exists, obtain copies of the statements on these accounts to determine the balances. You may also need the statements if your spouse has made large or inappropriate purchases on the cards. Any marital debt that is incurred after the filing of the divorce petition is to be used for reasonable and necessary expenses. So if your spouse is out buying diamonds or a new truck, you may want to get copies of the statements for those purchases.

If you cannot find credit card statements on each of the accounts, contact the credit card company directly and request they send them to you. You may want to check their websites as you might be able to make the request online. I normally want my clients to get a minimum of 12 months worth. Check with your lawyer to see what he recommends. If you have difficulty obtaining the credit card statements, an Authorization for Financial Disclosure may be helpful.

Full post as published by Colorado Family Law Blog on May 14, 2007 (boomark / email).