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Dividing debt can be a painful part of divorce

On Behalf of | Mar 7, 2013 | Divorce |

Often, only one spouse acts as the primary manager of household finances. However, it is important for both partners to keep abreast of income and spending during a marriage in order to make sure that when divorce comes along, one is not left with half of a bill that has been years in the making. This can be especially true in high asset divorce.

A woman recently found this out the hard way when she and her husband decided to split up. Her husband, who was in show business, controlled all of the couple’s finances. When he ordered limousines, took her on extravagant vacations and treated her to fancy dinners, she had no idea that they were spending far more than they actually made.

When the marriage eventually broke down and divorce became inevitable, she learned that her share of the couple’s debt was $4 million. This may seem fair since she enjoyed the excesses to some degree, but she may have made other decisions if she were fully aware of the financial situation. For example, she may not have put her career on hold to move with her husband to Colorado.

Eventually the woman had to undergo bankruptcy, and became thankful that she already owned a vehicle because the hit to her credit would have made it prohibitively difficult to buy another. She could still sell her artwork, and she was able to start a business designing and selling clothing in the kind of upscale boutiques which she had previously shopped in, but it was not until her business failed that she finally buckled down and decided to learn something about how to manage her finances.

Divorcing spouses are not always necessarily liable for their partner’s spending. If the partner spends money in secret, to his or her exclusive benefit, that partner may be guilty of wasting marital assets. In such a case, the partner who did not take part in the spending may escape liability for the other partner’s wasteful debts.

Source: Asbury Park Press, “Dreaming of a celebrity marriage? Mine left me $4 million in debt,” Elizabeth Bryan, Feb. 20, 2013