Debt Division

The law requires judges to consider several factors when dividing up debts. These are just a few examples of those considerations:

• The contribution of the spouses
• When the debt was incurred
• Who incurred the debt
• The reason the debt was incurred

During any marriage, spouses can incur debt in everyday activities, or for special things like the marital home, houses, cars, and vacations. Sometimes, the family incurs a lot of debt. All of these debts have to be divided between the parties at the end of the divorce case. Sometimes, a court’s logic in dividing these debts can be confusing and frustrating.

Most legislatures require courts to determine the value of marital debt and divide it “equitably.” Equitable division means the court considers all relevant factors and is supposed to divide things “fairly.”  In most states, there is no requirement that marital debt is divided 50/50.

In practical terms, courts and family law lawyers generally start from the position that all marital debt should be divided 50/50. From that starting point, an argument can be made that a spouse should be more responsible for a particular debt because they incurred it, or maybe incurred it without the other spouse’s knowledge, or for purchase to which they didn’t agree. Additionally, a court can be convinced to allocate debt disproportionately when a party simply can’t afford to service it.

What constitutes marital debt is often a confusing question. In general, marital debt is debt that was acquired during the duration of the marriage. Separate debt most often means debt that a spouse had prior to marriage. Separate debt means the party who walked into the marriage with the debt is responsible for it after the divorce.

Separate debt typically does not count toward a 50/50 division. The separate nature of debt can be clouded by payment on the debt from marital funds. This is especially true where the debt is associated with an asset. Top divorce lawyers often engage in “tracing” these clouded debts to try to figure out what’s marital and what’s separate.

Often times, clients are very distraught by the fact that credit cards in the name of the other spouse may still be marital debt. This can be the case even if the client had no idea their spouse was using the credit card. In fact, the other spouse could be using the credit card to pay for the expenses related to their affair and it’s still marital.

Simply because a debt may be in the name of one spouse does not necessarily mean it is the responsibility of that spouse. Very often, divorce lawyers have to look deeper into the nature of the debt to determine how it should equitably be divided.

Many times, we see a spouse run up the debt on a credit card right before, or just after, filing for divorce. There may be legitimate reasons associated with incurring this new debt. For example, a spouse might need their own apartment and need to furnish it quickly. Also, a spouse may need to hire a good divorce attorney.

These are generally considered legitimate reasons to incur debt. Occasionally, this debt is incurred in retaliation for the failed marriage. A spouse may decide to run up the debt with a first class ticket to Aruba for a nice two-week vacation. Or worse, may bring their new boyfriend or girlfriend along on your dime.

Timing here may be important for court in determining an equitable division of these debts. But even if the judge believes the acquisition of the debt was retaliation for the divorce, they may, or may not, allocate these retaliatory debts unequally. It’s the sole discretion of the judge how to divide the debt incurred by the trip to Aruba.