One of the main issues when it comes to a divorce is how to split up debt. Even if one party is responsible for the majority of debt, most debt is shared by the couple the same way as assets. Because of this, divorce lawyer has to deal with splitting debt between two parties.
What’s Causing This?
Debt has become a common word in today’s world. It’s even rarer to find someone with little to none of it. Back in the 1960s, most people would only have a home and car loan to pay off. They would pay this off on an average of 20 years because of the popularity of that type of mortgage agreement. Once the contract is over, the remaining balance burns off.
Not only are mortgages and other loans longer today, but they are more expensive. An increase in housing prices, inflation, and society’s acceptance of debt have contributed to this situation. Their debt is a combination of three main types of loans:
- Personal loans like credit card debt
- Mortgages
- Student loan
Student loans are particularly detrimental to finances considering that they transformed into a trillion-dollar industry. Most Americans have experienced increasing debt over the years, making them more and more difficult to pay off. In addition, the interest rates have increased, meaning paying loans off completely often takes decades.
What Does The Future Hold?
The numbers fluctuate, and there have been some positives to come out of this environment. Even millennials and Gen Z are now learning to manage their money better than the previous generations. However, one of the biggest challenges they need to face is tackling personal debt. Specifically, people today have become reliant on their credit cards.
With high-interest rates, the COVID-19 pandemic, and inflation, it’s no wonder many people are struggling in this area. Rates can cripple even the most stable families if they make a wrong move.
One positive to gain from this is that people are now moving away from home equity debt. Some people no longer want to use their home equity because a misstep can lead them to lose their investment.
We cannot say the same thing for other items. Changes in payment terms and loan agreements have increased prices for big-ticket items, particularly cars and other vehicles.
How Can Divorce Lawyers Handle Debt?
Telling someone to settle a debt before divorce proceedings isn’t so easy. Most people are deep in values they cannot immediately pay, even with help. What matters is that they’re prepared to tackle it during and after the divorce. You need a skilled lawyer to avoid complicated marital debt situations like bankruptcy.
The move is to avoid rash decisions that could leave you financially vulnerable. An experienced lawyer can help you deal with that.
While there isn’t a one-size-fits-all strategy when dealing with debt, being aware is the first step. Today’s lawyers must have plans in place to cater to different scenarios. With how things are progressing, debt may not be a permanent problem as time goes on. With future generations learning, debt is only a challenge that lawyers have to deal with at the moment.
If you need help, don’t hesitate to contact The Law Offices of Paul Brownstein. We have some of the best divorce lawyers in the state ready to serve you. They know all about the Pennsylvania Divorce Code and can handle divorce debt.
