Personal and Joint Liabilities and Documentation
Proof of liabilities owed by one or two parties to a divorce are a vital part of what financial records to bring to a divorce mediation. Without an accurate list of the debts that are owed by the parties involved in the mediation, there are liable to be problems later. When couples divorce and their finances are entangled, it is helpful to make sure that they are accurately represented during the mediation process. Here are some of the liabilities that must be disclosed during the mediation process.
Credit card bills - whether the debts are in the name of one or both parties to the divorce, a full statement of credit card debt must be provided to the mediator. This is often a fairly simple process as they can be handled by supplying the most current statement. It is important that inactive cards be reviewed, especially if they are in both names, as they may need to be cancelled;
Automobile loans - those who are going through the divorce process should disclose any and all automobile loans during mediation. Generally, auto loans are payable over a maximum of five years but regardless of how much time is left on the car loan note, proof of the loan as well as the balance should be provided. Do not forget auto leases when creating a list of liabilities;
Home loans - whether the marital home is owned by one or both parties to the divorce, a current copy of the mortgage payments due monthly will be required. If the couple (or one person) has investment property, these documents should also be brought to a divorce mediation. First mortgages, second mortgages and home equity loans all have notes that are attached to them. Copies of the notes as well as a current statement of how much is owed on each loan should be obtained;
Student loans - if either spouse has student loan obligations, proof of these obligations will be required. Remember, most student loans are in the name of only one person, though the couple may have co-signed a student loan for a child;
Retirement plan and/or insurance loans - loans that have been taken out against insurance policies or retirement plans should also be discussed during a divorce mediation. These loans not only have an impact on the value of these plans but they also may require payments on a monthly or quarterly basis;
Child maintenance debts - if either spouse was previously divorced, there may be a maintenance agreement in place with a former spouse. These debts should be included as part of the liability discussion in a divorce mediation;
Personal loans - if either spouse has borrowed money from a friend, family member or the company they work for, a statement of the original loan amount, interest payments and balance should be provided.
In order to ensure that liabilities are disclosed completely, each party may wish to consider requesting a free copy of their credit report. This will help ensure that all liabilities are accounted for and that additional debt is not a surprise to either party later on.
Please continue to page 3 for a discussion on other pertinent financial documents regarding owned business ventures