What type of clause should be included in a separation agreement regarding unsecured debt?

In the context of a separation agreement, including a hold-harmless clause regarding unsecured debt is vital for providing clarity and protection for both parties involved. A hold-harmless clause establishes that one party agrees to assume full responsibility for certain obligations—in this case, unsecured debts such as credit card debts or personal loans.

This clause serves to protect individuals from financial consequences related to debts incurred during the marriage that are assigned to one party. For instance, if one spouse agrees to take on a particular debt, the hold-harmless provision ensures that the other spouse will not be held liable for that debt, preventing potential financial repercussions and legal disputes in the future.

In contrast, while an indemnity clause may also deal with financial responsibilities, it is more focused on compensation for losses incurred rather than specifying who is responsible for debt obligations. A severance clause typically refers to the termination of rights or benefits and would not directly address debt responsibilities. A non-compete clause is pertinent to preventing one party from entering into a similar business after separation and does not relate to financial obligations regarding debts.

Thus, the clarity and protective nature of a hold-harmless clause make it the ideal choice for addressing unsecured debt in a separation agreement.