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How can business debt affect your divorce?

| Aug 2, 2020 | Family Law |

If you get the business in your divorce, it may seem like a good thing, but if your business has debt, it could spell trouble. Debt can haunt you in many ways in a divorce. 

Forbes explains that business debt may not only make it tough to move forward with the business after your divorce but it also can take a toll on your personal finances. 

Alimony and business debt

One thing you may not think about is how your debt could affect any spousal support award. The court will consider your regular income from the business. It will not consider the fact that you have a large debt payment to suddenly make. So, you may end up having to pay more alimony than you can afford, which could mean you have to lower what you pay on any debt. 

You may have to revise your budget and deal with tight cash flow until you pay off the debt. 

Liability and business debt

When fighting for the business in your divorce, you may not realize that you are also fighting for the debt. If the court gives you the business, that means you alone must pay back any debts the business owes. It is highly unlikely the court will split business debt and not business ownership. 

Personal funds and business debt

Another area of trouble is if you comingled business and personal finances. If you used business assets to secure personal debt, then you may need to take on those personal debts to ensure you do not lose any business assets.