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When it comes to divorce, who is responsible for the debt?
This article looks at how debt is divided in divorce, with particular emphasis on Arkansas’ divorce laws.
During a divorce it is well known that both spouses will have to come to an agreement over who gets certain assets, such as the home, car, and other property. However, as Forbes points out, what many couples going through a divorce often overlook is that debts will also have to be split between both parties. Dividing debts can be an especially contentious issue when dividing property since, obviously, neither spouse wants to end up paying more than his or her fair share of those debts. Below is a brief look at how debts are split during a divorce.
Dividing debts during a divorce works similarly to dividing other assets. Generally speaking, if the debts were acquired during the marriage, then they are considered marital debts that can be divided. If, however, the debts were acquired before the marriage then they are typically considered to be the sole responsibility of whoever acquired them at the time. However, even debts that date from before the marriage can get complicated, particularly if those debts were later transferred to a joint account.
As such, marital debts can take on many different forms, including credit card debt, student loans, auto loans, mortgages, and personal loans. In some cases, it may not matter whose name is actually on a particular debt. A student loan, for example, may be in only one spouse’s name, but that loan could have been seen as an investment by both spouses at the time to help improve their household income in the future, as the Wall Street Journal points out. As a result, a judge may consider a student loan that is in one spouse’s name to be the responsibility of both spouses.
Equitable is not always equal
Arkansas is an equitable distribution state, which means that during a divorce courts will seek to divide marital property in a way that is fair to both spouses. However, fair does not always mean 50/50. In some cases, especially when there is a significant disparity in incomes, a judge may determine that a fair settlement would require one spouse getting more than the other spouse. This logic also factors in when dividing debts. While debts can theoretically be split evenly, judges will consider a number of different factors, such as the income level of each spouse, to determine how to fairly split the marital debt.
Family law advice
Property division during a divorce can get very complicated and what one spouse considers fair may not be considered fair by either the other spouse or a judge. To help navigate the complex world of divorce and property division, those going through a divorce should talk to a family law attorney today. An experienced attorney can help clients understand what their options going forward may be and how to negotiate a settlement that may be in their best interests.