Divorce and Debt
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What is Marital Debt?
Marital debt is the amount of debt held by two people when they decide to get divorced. Married people often have joint finances in all areas of their lives, so when they divorce, they have joint debt. Tax debt and credit card debt are two areas where it very common for two people to have joint debt after their divorce.
Joint debt can be worked out between the divorcing parties on their own outside of a courtroom if they are able to come to an agreement. Many couples go to mediation to resolve questions of how marital debt will be paid back. If an agreement can’t be reached, the judge in divorce court will hear both sides of the case and make a judgment that both parties are legally bound to adhere to.
How is Debt Divided in Divorce?
There are two kinds of laws regarding the division of joint assets and debt during divorce: equitable distribution and community property. With equitable distribution, all joint financial holdings are divided at the time of divorce according to a number of considerations including which spouse earned what. It is more likely for spouses to be able to keep individual earnings and individual debts in equitable distribution states.
Community property states include Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In community property states, considerations of which spouse earned what are not considered. All marital property is held equal. This is also applied to debt.
The laws vary from state to state regarding common law marriages. It is best to consult a lawyer on all matters related to common law marriage and divorce.
How Does Child Support or Alimony Affect Debt?
Alimony is calculated based on the income of each spouse, the property and assets the marriage accrued, and how much each spouse will be able to earn once they divorce. Child support laws are regulated by law with fixed equations. Whether the divorce is a no-fault or with-cause divorce could also be a consideration in deciding alimony payments.
A judge will make a decision about how to divide debt as well as how to divide assets. Alimony and child support are set based on the outcomes of these equations and considerations.
Do I Need a Lawyer?
Yes. Everyone who is going through divorce proceedings or considering divorce proceedings needs an attorney to represent them. The law is very complex and many future interests are at stake. A family law lawyer can advise you of your best options and represent you in court.
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Last Modified: 07-20-2016 11:27 AM PDT
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