Divorce: When Your Spouse's Debt Is Your Debt

Posted on: 26 April 2019


When a couple parts ways, the way things are divided are a mesh of agreements, laws, and rulings. Knowing about how your state handles debt before you file for divorce is to your advantage so read on for some info about how your state might handle this issue.

What is Marital Debt?

You will hear the above term from your attorney and it's helpful to understand what it means. The debts you already had at the time of your marriage – your auto loan, credit cards, student loans, etc – remain entirely your responsibility after you marry. The debts you take on after the date of your marriage are assigned depending on whether you live in a community property state or an equitable distribution state. If you have joint debts after the date of your marriage, the marital debt laws of your state apply.

Debt in a Community Property State

Many know about community property debt and property issues because of some well-publicized Hollywood divorce situations. California is one of only 8 states that use the community property method of dividing debts (and property). The word community is key because the law considers a married couple a literal community of two. That means that from the date of their marriage going forward, nearly every financial decision they make is labeled with both of their names (no matter whose name is actually attached to the debt).

For those high-flying celebrity divorces, this can mean a low-earning spouse could be saddled with their high-earning spouse's debts. They also, of course, are entitled to 50% of the marital property. For others that reside in a community property state, it's vital that you plan ahead and know about your spouse's debts before you file for divorce.

Debt in an Equitable Distribution State

As the name implies, states that follow the equitable distribution model tend to assign debt based on the party who initiated it. For example, if you applied for an Amazon credit card in your name only and have a balance going into divorce, you are going to be responsible for this debt regardless of the divorce. If you and your spouse applied for a card jointly, the judge may split the debt right down the middle. In the case of only one party primarily using a joint credit card, the party that objects must hire a forensic accountant to trace the card use and come up with a more equitable split.

This issue can be complicated if you have joint debts, so speak to a divorce attorney to find out more.