Married couples typically live together. They combine their income to maintain a better standard of living and share household expenses. They also often have shared credit cards and other financial responsibilities.
Those debts can be a major hurdle during divorce proceedings. Spouses may argue over what to do with those debts or who should be responsible for them. What is the most practical way to handle shared debts during a divorce?
Debts are subject to division just like assets
Sometimes people mistakenly think that the name on the credit card or other debt determines which spouse is actually responsible for the debt when they divorce. However, that is typically not true. Unless one spouse acquired the debt prior to marriage or intentionally lied to the other spouse about those financial obligations, most debts accrued during the marriage are the responsibility of both spouses.
People can agree to have each spouse take responsibility for certain accounts. They could also negotiate a settlement that allows one spouse to keep more marital property while also assuming responsibility for more marital debts. Others may intentionally use marital assets to pay off any shared debts and joint accounts. That way, the failure of one spouse to pay in accordance with an agreement or property division order should not affect the credit and finances of the other spouse. Debts held in the names of both spouses could lead to collection activity against either spouse if the other fails to pay on those accounts.
Identifying joint debts and other marital financial obligations – and thoughtfully considering how they should be managed – may help people negotiate a fair and appropriate property division settlement.
