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Debt and Divorce

When you got married, you did it with the intention of building a life together with your spouse. You meant what you said when you said your vows, determined to make a good life together. Unfortunately, even the best intentions are not always realized. Sometimes the best decision you can make is to get divorced. Divorce is never easy, and it can become emotionally charged and complicated. This is especially the case when it comes to dividing up marital debts as a part of the divorce settlement. So how do you go about doing that?

Coming to an Agreement vs a Court Decision

There are generally two processes through which marital debts can be divided during a divorce settlement. The first is when the two parties agree amongst themselves as to how the marital debts will be divided. When that happens, the court will include the agreement in the divorce settlement. The second option happens when an agreement is unable to be reached. In that case, the court will do its best to equitably divide the marital debts between them.

Joint Debts

Joint marital debts are debts that are incurred for the benefit of the family as a whole. In the case of joint debts, both spouses are generally considered responsible for them. Joint credit cards are a common example of a joint debt that a couple might incur (regardless of whether one spouse used the card more than the other). This can be a little scary sometimes, since it prevents you from having more complete control over your finances. You may want to try removing your name from joint credit cards and bank accounts to minimize your risk and maintain as much control over your individual finances as possible.

Personal Debts

Not all marital debts are jointly incurred. Some are personal debts. As the name suggests, these debts are the type that are in the name of one spouse only. An example of what is commonly considered a personal debt, traditionally, is one party’s student loan debt, unless there is an agreement to the contrary regarding that debt. In deciphering what is a personal v. martial debt, one can be waking a very blurry line, it can be confusing. Just because a couple has separate credit cards does not necessarily mean the credit card debt is automatically considered personal and non-marital.

Property Debts

Some property debts may bleed into the category of joint debts. After all, it’s not uncommon for both spouses to be named on things like houses and vehicles. Even if a spouse’s name is not on the title to the marital home, that does not mean the house is not marital property, to be equitably divided, nor does it mean the spouses name who is not on the title to the home is not responsible for any debts pertaining to the home. If a home was purchased during the marriage with marital funds, it is, usually, a marital asset and a marital debt, regardless of whose name is on the title.  Same can be said for personal vehicles, recreational vehicles, etc.

Who is and isn’t Bound by the Court Order

You might think that once marital debts are divided in the divorce settlement and made official by way of court order that everything is cut and dried and that will be the end of it. In a majority sense, that will hopefully be the case. Both you and your ex-spouse are bound by the court order to be financially liable for debts as assigned by the court order and are expected to act accordingly.

Not everyone is bound by the court order though. For example, creditors aren’t always required to honor the division of debts in the divorce settlement. This is regardless of whether they have been made aware of the court order or not. Because of this, they could still seek payments from you, forcing you to go to your ex-spouse to try to get the money to resolve the debt. The exception to this is debt incurred from medical expenses for minor children. Those creditors must honor the division of debt, so long as they’ve been provided with a copy of the court order.

Money can easily become a touchy, tricky subject during divorce proceedings. As difficult as it can be to discuss, it’s important to talk about how marital debts will be divided in the divorce settlement. The good news is that it’s not something you have to try to resolve with your spouse all by yourselves. Our skilled Salt Lake City family law attorneys can help you with every part of your case, including negotiating a fair division of marital debts. Just Law’s experienced family law attorneys are committed to delivering family-oriented, results-driven representation. You can trust that we’ll do everything we can to ensure that the division of marital debts in your divorce settlement goes as smoothly and peacefully as possible.

Do you need help navigating your divorce? Just Law Utah can help! Click here to learn more about how we work to make the divorce process easier for you.

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