Much of the divorce process involves splitting up marital assets. Couples may own a home together, have savings accounts, and accumulate numerous tangible items, such as jewelry, home furnishings and vehicles. They must determine how to divide these assets.
However, it’s important to remember that property division also includes debts. For instance, if the couple has a home, they may also have significant mortgage debt. Who becomes responsible for that debt after the divorce? Many couples also have shared credit card accounts, resulting in joint credit card debt that must be addressed. Other types of debt that may be considered include student loans, medical bills, lines of credit, home equity loans and more.
Which debts are marital property?
The key to dividing debts is determining who will be responsible for them moving forward. Generally, debts incurred during the marriage are considered marital debts and are likely shared between both parties. These debts must be divided during the divorce. On the other hand, debts brought into the marriage are typically considered separate debts, and the individual who incurred them may be solely responsible for paying them off.
Student loans provide a good example of this distinction. If two people marry after completing college and are still paying off student loans, those loans are likely personal debts incurred before the marriage and don’t need to be divided during the divorce. However, if one spouse goes back to school during the marriage—such as to earn a graduate degree—the resulting student loans may be considered marital debt. In that case, both spouses may be responsible for the loans, and they must be divided accordingly.
Dividing both assets and debts can be complex, so it’s crucial to understand all of your legal options to work toward a fair and equitable resolution.