Debt: How is it Paid? Who is Responsible?

By Staff Writer

Divorcing parties all too often enter the divorce process with varying amounts of debt. The division of these liabilities must be effected, either by the parties as part of a settlement, or by the Court is issuing a final determination of the case. How debts are divided varies greatly from State to State. In some States, all marital property, including debts, are divided equally between the parties. In other States, the Courts are afforded more flexibility and discretion in dividing the parties’ marital and separate debts.

In States where discretion is afforded the Judge in dividing debt, the factors which the Court can consider vary. In general, however, the Judge in your case will likely consider common sense factors, such as who incurred the debt, the purpose for the debt, whether the accumulation of the debt was made with the knowledge and consent of the other party and whether the debt is marital or was accrued before the marriage. In such States, a division of the debt does not have to be equal and can be divided between the parties based on the equities and factors applicable to the particular case.

If you live in a State that allows this type of flexibility, and your marriage is one where debt is a factor, you should speak with an attorney to discuss the rules of your jurisdiction. After speaking with an attorney, you should begin gathering documents and records to protect yourself in a potential divorce case. You should save proof of the debts, such as detailed credit card receipts, gambling slips and other records showing the dates, amounts and purposes of the purchases. An attorney will help you determine other records and documentation that will prove useful in your case.

In some marriages, there is, quite simply, too much debt. Whether yours was a marriage where you lived beyond your financial means or where, because of other factors such as an unexpected illness or injury, if, even after a division of the debt, you cannot financially survive, you should consider other options.

For many parties, credit counseling or even bankruptcy are options that can afford relief from overwhelming debts and persistent creditors. Because divorce attorneys do not routinely handle such matters, you may have to meet with yet another attorney to discuss your rights and analyze your financial situation. Although you will likely be parting ways with your ex, it may be more financially advantageous to you to file joint bankruptcy. This is an option which you should explore with your attorney.