Our Phoenix divorce lawyers know that it is necessary to carefully evaluate the finances of a divorcing couple. Sometimes one or both spouses may have provided loans to relatives. Knowing how to handle such loans can help spouses leave the marriage in an equitable manner.
The first step in handling such loans is determining the value of the debt. In a typical case, it is not difficult to determine the value of a debt. There is usually plenty of documentation that shows the current balance owed on a debt through a monthly statement or other accounting. Additionally, the payments can be deducted from the original balance. However, such arrangements are often not the case when involving loans to family members and friends. In some instances, such a loan may eventually evolve into a gift or a loan that is ultimately forgiven. As such, it can sometimes be difficult to distinguish between a loan and a gift.
Our Phoenix divorce lawyers may provide scenarios to help demonstrate the difficulty of this issue. Phoenix divorce lawyers may provide examples of parents who lend money to their children to help purchase their first home. These types of arrangements are often not formal in nature. There may be no written record or interest applied to the loan. In these situations, the parents may have never expected the funds to be repaid until the divorce is imminent.
Distinguishing Gifts from Loans
Our Phoenix divorce lawyers can explain that there are a number of factors that can be evaluated to determine whether something was a loan or a gift. For example, there may have been an original agreement that specified that something was a marital debt or that was even formalized in a written document that states fixed terms and how long the borrower had to repay the loan. Interest may be included and records may be kept of all payments made. There may also be evidence of collection by the lender.
Legal Assistance from Our Phoenix Divorce Lawyers
For more information on these types of loans, contact Phoenix divorce lawyers from the Law Offices of Janice M. Palmer, P.C. by calling (480) 820-4771.