Throughout your marriage, you probably lost count of the amount of money you and your spouse spent together. Perhaps you purchased a home and maybe a place to spend the summers. You likely bought furniture, appliances, clothing and vehicles, and you may have even splurged on fine art or antiques. Undoubtedly, you spent a great deal of money on your children.
Now that you are approaching divorce, you may be dreading the process of valuing and dividing these assets as equitably as possible. While you may feel strongly about certain assets that you want or don’t want from the divorce, you would do well to remember that the court will also divide your debts in a similar manner.
Accumulating many assets often means accumulating debt. You and your spouse may have joint debt in the form of mortgage loans, credit cards, other loans and educational debt. Unless you and your spouse can work out an agreement for dividing the debts, the court will decide which of you takes on those responsibilities. Even if only one of you accumulated a certain debt, such as on a credit card, in a community property state like Arizona, the court may hold that both spouses are equally responsible for the debt.
One serious implication to consider is that no matter what you decide in your settlement or what a judge issues in a court order, your creditors can legally hold you responsible for any debt in your name. For example, if your divorce order assigns your spouse responsibility for paying a joint credit card, the credit card company can still sue you for delinquency if your ex decides not to pay it. For this reason, it is wise to try to pay off as many joint debts as possible before divorcing.
Additionally, if your spouse accumulates debt in his or her own name, the creditor may file a claim in court to attach any of your spouse’s assets, including those to which your name may still be attached, such as a house.
Dealing with debt in divorce
While it is common to focus on the assets during a divorce, you would be wise not to overlook your marital debt. Carrying joint debt beyond your divorce can create a burden that is difficult to overcome, and it is not unusual for newly divorced partners to seek bankruptcy to escape the hardship. Working with a skilled attorney throughout your divorce can improve your chances of obtaining a fair division of assets and debts that will reduce the likelihood of such struggles.