Debt Division During a Divorce

Apr 6, 2018 | Divorce

The division of marital debt is one of the most common issues that must be decided in a divorce case. The guidelines the courts use during this process vary considerably between states, which may mean that that division may not be even between the divorcing parties. However, all marital debt must be allocated in a divorce case, regardless of the specific division. Courts may take many factors into account when deciding divorce debt division, including the reason the debt was incurred, when the debt was incurred and the contribution of each spouse in incurring the debt.

Overview

Spouses routinely incur debt for a variety of reasons, whether it’s for essential living expenses or luxuries. Divorce debt division can be confusing due to the varying standards between states, which can generally be divided into equitable division and even division. A standard of equitable division means that the court is supposed to divide marital debt fairly according to various relevant factors, while an even division standard means that marital debt is split evenly between divorcing parties. Texas laws about debt division generally result in the even division of marital debt, although exceptions exist.

Regardless of the specific standards that apply, courts and lawyers generally begin divorce proceedings from the position that debt will be evenly divided. The attorneys then make arguments to assign greater responsibility for each debt to a particular spouse. These arguments are often based on issues such as one spouse incurring the debt without the other’s knowledge or permission.

Marital Debt

Courts also determine whether each debt is a marital debt or a separate debt of one of the personal spouses. Marital debt is generally acquired during the course of the marriage, whereas a separate debt existed before the marriage. The party that walked into the marriage with a debt will generally be sure responsible for it after the divorce. The nature of the debt often becomes clouded when marital assets were used to pay off the debt. This is especially true when a debt is associated with an asset, as is the case with a car loan or home mortgage.

Credit Card Debt

Clients are often dismayed to find that a credit card in the other spouse’s name still qualifies as marital debt, even if the client was unaware of the credit card’s existence. In some cases, the sole purpose of the credit card may have been to pay for the expenses of an affair. Dividing up debt frequently requires a closer examination of its nature to determine how it should be divided, rather than simply looking at the name on the credit card.

Timing

Timing is often the deciding factor in assigning marital debt. Divorcing spouses often run up debt shortly before filing for divorce, which may have legitimate purposes such as renting an apartment or hiring a divorce attorney. Debts may also be incurred during a divorce simply to retaliate against the other spouse. However, the court may still allocate a debt evenly, even if it believes it was retaliatory.

Schedule an appointment today to discuss your case with our dedicated divorce attorneys. We can help you work toward a solution that works best for everyone.

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