Paying Debt In Lieu of Maintenance

 

During divorce, the party with less earning power often wants to know if he or she is a good candidate for maintenance (aka alimony). Your family law attorney can advise you of the various factors under the law that the judge will likely consider, most importantly of which is your current level of income.

 

Another consideration, if and when maintenance payments are not available, is attempting to disproportionally allocate debt, such as the credit cards, between you and your spouse. For the person receiving the lesser amount of debt this can sometimes be better than receiving maintenance because maintenance is includible in income for tax purposes and thus, taxable.

 

The reduction in debt repayment allows for more monthly cash flow than the party would otherwise have had she received maintenance and been required to use it to pay credit card debt. The spouse receiving a reduction in debt in lieu of maintenance might feel like she “lost” by not getting maintenance but, in fact, come out financially ahead.

 

Whether it be a reallocation of credit card, mortgage, or any other kind of debt, you should discuss with your lawyer the possible benefits of one spouse paying debt in lieu of maintenance. Depending on how the debt is titled and the incomes of each party, it may be a beneficial option for both parties.

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