If you are considering a divorce, then it’s important to learn how the process will work. One thing you might not have considered is that it might be advisable to liquidate certain assets as part of the process.
You and your spouse will likely have worked hard to buy your assets, so why might liquidating some be a good idea?
You may still owe money on them
The principal asset that most people “own” without fully owning it is their house. The bank that gave them the mortgage will still have a claim on the property until the mortgage is paid off in its entirety. Another asset commonly found in this category is a vehicle. The lender of the loan has the right to take your car if you fail to keep up with payments.
Your obligation to make payments on mortgages and other loans won’t stop just because you divorce. The lender will still want their regular payments on time. While you could agree to manage this between you and your ex, it’s potentially problematic to make that agreement. If one person defaults on their turn to pay the loan or fails to pay their half of a monthly payment, it could jeopardize ownership of the assets and harm both of your credit scores. If one person gets to keep the asset as part of the property division, it’s typically best to refinance the mortgage into just their name so that the other spouse isn’t burdened by the debt.
Cash is easier to divide
Putting a value on assets can be difficult. Take the car you bought for $60,000 three years ago: Is it worth $40,000 now, or does the mileage and those scratches mean it is only worth $35,000? The house might be worth half a million right now, but could the current economic turmoil mean it will soon be worth less?
If you liquidate assets, you get a definitive amount of cash to put into the property division pot, after paying of any outstanding loans that may exist on them.
Appropriate legal guidance can help you make the best decisions for your situation. This includes looking at your assets and learning more about the options you have to deal with them in your divorce.