Ending a marriage can be complicated, especially when it comes to dividing up assets and liabilities. One common question that arises is whether you will be responsible for any debts your soon-to-be ex-spouse incurred during your marriage. The short answer is, it depends on where you live, the type of debt, and your involvement with the debt. Keep reading to learn more about how divorce affects debt obligations.
General Rules on Debt in Divorce
When a couple divorces, either spouse may be responsible for certain marital debts. Some general guidelines on debt responsibility after divorce include:
- Most states view marital debt as jointly owned, even if only one spouse’s name is on the accounts.
- Courts will typically assign responsibility for joint debts to the spouse who incurred the debt, if possible.
- Debts in both spouses’ names may be divided equally, or based on factors like income disparity.
- Debts incurred separately by one spouse will often remain that spouse’s responsibility.
- Spouses can agree to divide debts however they choose in a divorce settlement.
While these are common approaches, state laws vary when it comes to distributing marital debt. Some states use a system of “equitable distribution” that aims for a fair division based on the couple’s circumstances. Other states use a “community property” system that splits assets and debts 50/50. Be sure to check local laws on how debts may be handled in your divorce.
Types of Debts and Your Responsibility
Whether you are responsible for a specific debt after divorce often depends on the nature of the debt itself. Some key types of debts include:
Joint debts
Joint debts are accounts held and used by both spouses, such as joint credit cards or auto loans. Even if your name isn’t on the account, debts that were incurred for the benefit of the marriage may be considered joint. With joint debts, you can typically expect shared responsibility for the balance.
Individual debts
Debts in only one spouse’s name are considered individual or separate debts. This includes debts brought into the marriage, as well as new debts opened separately during the marriage. The spouse who acquired individual debt will usually remain responsible for it after divorce.
Secured debts
Secured debts use collateral like a house or car as backing for the loan. The owner(s) listed on the property title are normally responsible for the associated secured debt. For example, the spouse keeping the house in the divorce will likely take over the mortgage.
Unsecured debts
Unsecured debts have no collateral tied to the account. Credit cards are a common example. Unsecured debts tend to be treated as joint or individual obligations depending on who incurred the balance and if both spouses benefited.
| Debt Type | Common Examples | Likely Responsibility |
|---|---|---|
| Joint | Joint credit cards, auto loans | Shared responsibility |
| Individual | Student loans, medical bills | The spouse who acquired the debt |
| Secured | Mortgage, auto loan | Whoever retains the collateral |
| Unsecured | Credit cards, personal loans | Depends on circumstances |
Factors That Influence Debt Responsibility
While the type of debt impacts responsibility, other factors come into play as well. Common considerations include:
- Who incurred the debt: Courts often assign debts to the spouse who acquired them, especially individual debts.
- When the debt originated: Debts brought into the marriage typically remain separate, while those acquired during the marriage may be deemed marital.
- Purpose of the debt: Debts that supported family needs, like a mortgage, tend to be viewed as shared.
- State laws: Community property states are more likely to divide debts equally versus equitable distribution states.
- Income and assets: Spouses with more resources may be asked to assume more debt.
- Divorce agreement: Spouses can specify debt responsibility in their settlement.
Discussing these factors with your divorce lawyer can provide more clarity on how debts might be divided in your situation.
Options for Managing Debt Responsibility
For many couples, determining debt responsibility is a negotiation. There are a few options couples have for dealing with debts in a divorce:
One spouse takes responsibility
The court may assign certain debts solely to one spouse. This is common with individual debts and debts secured by assets one spouse keeps. The receiving spouse should refinance or formally assume responsibility for the accounts.
Debts are split
Courts may divide joint marital debts between spouses, often 50/50. Each spouse would then be responsible for their portion only. They should remove the other spouse from joint accounts.
Debts are consolidated
One spouse may agree to take on all joint and individual debts in exchange for keeping certain assets. This simplifies the process but may not be financially viable for some couples.
Creditors are paid off
For smaller debts, one spouse may choose to pay off the balance so neither is responsible going forward. This can provide a clean slate, but may deplete savings.
Spouses agree on division
Most couples determine debt responsibility through negotiation and formalize it in their divorce settlement agreement. This allows customization based on their situation.
Talking through these options with legal and financial professionals can help you and your spouse pick the best debt division strategy.
Protecting Your Credit and Finances
To safeguard your credit and financial future after divorce, be sure to take steps like:
- Check your credit report to identify all joint and individual debts.
- Change account user names and contact info to limit future responsibility.
- Inform creditors and lenders of your divorce status.
- Dispute and remove authorized user statuses on ex-spouse accounts.
- Consider freezing joint credit cards to prevent future charges.
- Consult professionals to understand the full financial impact.
Taking proactive measures allows you to gain control over your financial life post-divorce.
Getting Legal Help
Navigating debt division in divorce can be challenging. An experienced divorce attorney can advise you on state laws and debt responsibility based on your unique situation. Legal help may also:
- Negotiate with your spouse on debt allocation.
- Draft an equitable divorce settlement.
- Represent you in court if agreements cannot be reached.
- Modify divorce decrees if needed.
- Assist with refinancing or releasing joint obligations.
With so much at stake financially, legal guidance can prove invaluable. Contact a qualified divorce lawyer to discuss your options for limiting debt liability.
The Bottom Line
Determining which spouse is responsible for debts after divorce depends on state law, the debt type, account ownership, and several other factors. While one spouse may be assigned certain debts, some marital debts are divided equitably between the couple.
Understanding the potential outcomes in your jurisdiction allows you to plan appropriately. Seeking legal and financial advice can also help you secure the fairest resolution so you can move forward after your divorce.