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What Happens to my Spouse's Debts During the Divorce Process?

It is no secret that the financial issues surrounding a divorce can be incredibly complex. While people are married, most couples join their bank accounts. This means that all of their debts, purchases, and recurring bills generally become one.

During divorce proceedings, the division of assets is central. Dividing houses, cars, and deciding custody are all important issues; however, dividing the debt between the couple is a central component as well. What happens to these debts when a divorce is finalized?

The Debt Review

When a couple is married, debt accrues in the same manner as assets. For example, most people purchase a house while they're married. While the house is one of the largest assets, the mortgage on the house is usually the largest debt. A mortgage debt, in addition to student loans, car loans, and even credit card debt, is reviewed as the divorce moves forward. All of these debts are divided when the divorce is finalized. Central to the division of debt is the manner in which the debt accrued. When was it accrued and why?

The Division of Debt

Just as the court divides assets, debt will be divided as well. Many states seek to divide assets in a fair and equal manner; however, it is important to understand this doesn't mean the assets and debts will be divided in two. Instead, the court will seek to reach an agreement that is as fair as possible. One of the central issues in the discussion is whether or not the debt was accrued as a couple or as individual people. This is the first step in the division of debt.

Marital Debts: This is the label that the court gives to debts that were accrued while the couple was married. While car loans, mortgages, and credit card debt may have been built up during the marriage, the judge may decide that the debt that was acquired only benefited one of the two partners. If this is the case, the responsibility of the debt may be placed upon one of the partners and not the other despite the timeline of the debt.

Nonmarital Debts: These are the debts that are pertinent to only one spouse instead of both. The most obvious example is debts that were accrued before the marriage was finalized; however, some debts acquired during marriage may still be classified in this category, as discussed in the prior section.

Clearly, there is some gray area when it comes to deciding whether or not debts are marital or nonmarital. Therefore, it is important to hire an experienced divorce attorney who can provide expert advice. A lawyer's guidance is critical to reaching a fair agreement and can help reduce the amount of debt that an individual may be held responsible for. 

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