Dividing Marital Debt in Divorce

Marital debts, just like marital assets, are divided through equitable distribution. This means that property is divided between the parties based on what the court thinks is fair. Equitable distribution means that property can be divided 50/50, but that is not necessarily required.

These days, we see a lot of divorces that are more about finding a way to divide the debt than dividing assets. Since the economy has been so bad, I’ve seen houses that are underwater, and significant amounts of credit card debt.

How does the court decide whether our debt is marital or not?

Like regular property, debt is categorized as marital, separate, or hybrid. Debt is marital if it was incurred during the marriage for a marital purpose. If, for example, you used the credit card to help buy groceries in months where your paychecks were a little short, this is definitely a marital debt. However, just because something was purchased during the marriage and was charged to a credit card doesn’t mean that it’s automatically a marital expense. If you and your husband decided to purchase a boat, for example, and financed it together, the boat and the loan are marital assets or liabilities, depending on how much is left on the loan. If your husband went out and bought a boat without your permission, particularly if he did so right before or right after your separation, you could make a strong argument that this is a separate debt that he should take after the divorce.

What if the debt is from a gift he bought me?

If your husband opened, for example, a line of credit with Best Buy, and used it to buy you a new MacBook for Christmas, the debt is a marital debt, and subject to division. This is definitely a marital expense, and he probably isn’t going to be responsible for the debt (particularly if you also insist on keeping the MacBook).

Remember: separate property includes gifts given to you by someone other than your spouse. Gifts given to you by your spouse are marital, and so is the debt your spouse incurred in order to purchase it.

Will the court divide our debt 50/50?

When the court looks at how property or debts are going to be divided, it looks at what is fair. Oftentimes, the party with the higher income ends up taking a larger portion of the debt, because it is assumed that he (or she) will have an easier time paying it off than the party who earns less. Usually, it is shared in some kind of way that is proportional with each party’s earnings.

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