Debt in a divorce, who pays?

Credit cards as debt in a divorce
Credit Cards may be marital debt.

Marital debt may be accrued during the marriage.  When a couple ends the marriage, this debt needs to be assigned in the divorce. 

Debt follows the same pattern as property.  It needs to be identified, valued, and divided.  However, different types of debts may be treated differently.

 Mortgage Debt in a Divorce

Many divorcing couples have a family home.  Many of these have debts attached to them.  Typically, this includes a primary mortgage.  In addition, it may include a second or third mortgage.  These are most typically in the form of a home equity line of credit (HELOC).  

These debts typically flow with the home.  In other words, if one spouse keeps the house, he or she is typically assigned the associated debt.  This means he or she is responsible for paying the debt.

However, the lending agency doesn’t care about the divorce.  If the couple’s names are both on the mortgage, the lender considers them both responsible for repayment.  

Because of this, some divorces involve refinancing.  In this event, original mortgage is paid off and replaced by a new one with only one of the ex’s name on it.

Ultimately, this debt is typically subtracted from the value of the home when determining “home equity”.  This is the net value of the asset for the divorce.

Student Loan Debt in a Divorce

Typically student loan debt is assigned to the spouse who took out the loan, however this is not always the case.  The idea is that spouse is the only one who can receive the benefit of that debt.  

Credit Card Debt in a Divorce

If the debt was accrued while the spouses are living together and was used for marital expenses, typically this will be considered a marital debt.

A divorcing couple can typically assign this debt as part of balancing the property division.  In other words, if one spouse was receiving more in marital assets, he or she would typically take a greater share of debt.  This makes the marital property division more “fair and equitable”. 

Vehicle Loans

Like with homes, vehicle debt typically flows with the vehicle.  When dividing property, the remaining amount of debt is subtracted from the vehicle value.

Medical Bills

Typically, outstanding medical debt accrued during the marriage are considered marital debts.  

For other divorce or family law questions, please consult the list to the left or the FAQ page.  If you’re interested in retaining an attorney to help you, please feel free to contact my office for a consultation using the contact information on the left or the contact form on the Majeski Law home page.  For Court rules click here.