In divorce, you and your spouse will have to split your assets. However, you will also have to split any debt that you have accumulated over time. In many situations, you may be dealing with student loans, credit card debt, or a mortgage on the house. I will discuss splitting debt in greater detail here.
How debt is divided in divorce will depend on if the debt is considered marital or separate. If the debt is marital debt, it’s usually split between the spouses. This is generally the case unless one spouse accumulated the debt due to an issue. For example, if one spouse has a drug or gambling problem, and spent a lot of the marital funds on the habit, they may be responsible for the debt. Or, if one spouse went into debt paying for things for their lover, they may get more of the debt in the divorce. In those situations, one spouse may be more responsible for the debt, even if it was acquired over the course of the marriage. The court may therefore ask one spouse to take on all or most of that debt.
But as I have mentioned on other pages of this website, spouses can work things out based on their particular situation. I recently had a situation where there wasn’t a lot of cash but the husband in the relationship had both credit cards. He had a 401(k) and he was giving a portion to his wife. So, she took less on the 401(k) and he kept the credit cards. Spouses can oftentimes work these situations out, and in most cases the marital debt is split. An attorney can also help in splitting debt in a way that is acceptable to both parties.
Splitting the Marital Home
The house, on the other hand, is a different story. When it comes to a house, a couple has a few options. One option is to sell the home and have the debt paid off. Another option is splitting the equity. Finally, the parties can decide to refinance the mortgage if they decide that one party should continue living in the home. Both parties are entitled to the house equity. Even if your name is not listed on the mortgage, you are entitled to the home equity.
Splitting debt in divorce can be tricky and will likely depend on your particular situation. You need an individual plan for your individual debt situation. If you and your spouse have debt and you are trying to figure out how to split it, contact my office. I can discuss your situation with you and help you determine the best course of action.