Divorce can be a challenging and complicated process, especially when it comes to dividing up assets and liabilities. One important issue to consider is what happens to debt after a divorce. Here are some things you need to know:
What Is Debt?
Debt can take many forms, including credit card balances, mortgage loans, car loans, student loans, and other types of debt. During a divorce, debt is typically categorized as either separate debt or marital debt.
What Is Separate Debt?
Separate debt refers to debt that one spouse incurred before the marriage or debt that is solely in one spouse's name. In most cases, separate debt remains the responsibility of the spouse who incurred it. For example, if one spouse had a credit card balance before the marriage, that debt would typically be considered separate debt and would remain that spouse's responsibility after the divorce.
What Is Marital Debt?
Marital debt, on the other hand, refers to debt that was incurred during the marriage. This could include joint credit card balances, mortgages, car loans, and other types of debt. In many cases, marital debt is divided between the spouses during the divorce.
How Is Marital Debt Divided When You Get a Divorce?
There are several factors that can influence how marital debt is divided during a divorce. These factors can include the length of the marriage, the earning capacity of each spouse, the financial needs of each spouse, and the amount of debt that each spouse incurred during the marriage.
In some cases, the court may order one spouse to assume responsibility for a larger share of the marital debt based on these factors. For example, if one spouse has a higher earning capacity and the other spouse is financially struggling, the court may order the higher-earning spouse to take on a larger share of the marital debt to help support the other spouse.
It is important to note that while a divorce decree may assign responsibility for debt to one spouse or the other, creditors are not bound by this agreement. If both spouses are joint account holders on a credit card, for example, the credit card company may still hold both spouses responsible for paying off the debt even if the divorce decree assigns responsibility to just one spouse. It is important for both spouses to understand their legal rights and responsibilities regarding debt during and after a divorce.
Contact a divorce lawyer to find out more.
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