The average American family has more than $8,000 in credit card debt, and many families also have student loans, auto loans, mortgages, and other types of debt. When you get divorced, you need to know exactly what debt you are responsible for paying.
Dividing Debt Is Like Dividing Assets
When you’re divorcing, any debt you have will be divided the same way your assets are divided. Before this division takes place, all of your financial obligations need to be classified as either marital debt or separate debt.
Marital Debt Division
Marital debt is typically debt that is incurred during marriage. It could include credit card debt, a mortgage taken on your family home, a loan to renovate your home, or a car loan. Of course, there are exceptions to this general rule. For example, credit card expenses used to carry on an affair may be considered separate debt rather than marital debt.
If you and your spouse agree about how to divide marital debt, then the court will typically approve your agreement.
However, if you can’t come to an agreement, the court will find an equitable distribution of marital debt. Sometimes this is an even 50/50 split of outstanding debt, but sometimes equitable does not mean equal. For example, the court may consider how much each spouse earns, the division of assets, and other factors when dividing debt equitably.
Separate Debt Division
Separate debt remains the sole responsibility of the spouse that incurred the debt. Separate debt is typically debt that one spouse took on prior to marriage. Often, this includes a student loan.
Once you separate from your spouse and begin to live apart or divorce proceedings are started, debt that is incurred may be considered separate debt even though you are technically still married.
Talk to Your Divorce Lawyer About Debt Division
Your divorce attorney will work to make sure that all of your debt is classified correctly and you’re treated fairly when debt is divided. If you are getting divorced, please contact Stephen Bloomquest today to schedule an initial consultation about the divorce process, and get your questions about debt division and other important matters answered.