Dispute Resolution Services (DRS) : Topics to be Resolved : Liabilities

Most separating or divorcing couples have certain debts which are secured by an asset, such as a home mortgage or car loan. These debts are typically assumed by the person keeping the asset. A margin debt in an investment account is treated similarly.

Many of our clients also have unsecured debt, such as credit card balances, which are in both names or either party’s name individually.

Handling Liabilities in an ADR Setting
In any alternative dispute resolution process, it is necessary to identify each debt with the current balance due. It is often also necessary to provide the balance on the date of separation or temporary court order. The final settlement or court order must include a determination for each debt, as to which party will be responsible for that date.

Sometimes parties agree to equally divide a debt or otherwise apportion responsibility for it, depending on when the charges were incurred, and for what purpose. The clients may need to review historical credit card statements in order to decide how to handle various charges.

Whether the case is in mediation or decision making (court or private), it is helpful to determine a date after which each party’s charges are his or her separate responsibility. This will depend on how the clients are handling their temporary cash flow.

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