Divorce is messy in every respect. You have feelings you have to deal with, whether they be heartbreak, anger, sadness, or frustration. With kids involved, you have all of their feelings that come into play as well, complicating your own feelings. Then, of course, there is the stuff. Yes, the assets (and debt) that you compiled together during marriage now somehow have to be split appropriately.
Community property and equitable distribution
How is marital debt divided
Assets are not the only things couples can acquire during the marriage; debt is another thing that needs to be addressed during a divorce. Debts that must be addressed include:
- Credit card debt
- Mortgages
- Student loans
- Auto loans
- Medical debt
- Tax liabilities
Colorado mom Pam Archer found out about her shared debt only during the divorce. “I had no idea how far in debt we were until I saw the divorce papers and financial documents," she told Mom.com. "I was devastated at the thought that I was responsible for his thousands in credit card debt.”
Debts are handled on a case-by-case basis and vary among states. When it comes to a mortgage, if the house isn’t being sold, chances are that the debt will need to be refinanced under the sole name of the person taking it over. There are cases where one spouse is ordered to keep paying on the house their ex lives in.
Auto loans follow much of the same philosophy: Usually the person taking the vehicle will take over the payments. If they can’t, they often sell or trade in the car for something more manageable. Credit cards and medical debt are treated as joint in community property states; equitable distribution states look at when the debt was acquired as well as the fair disposition of it based on the entire financial case.
Only student loans acquired during the marriage (either spouse or your kids’ loans) are equally split unless otherwise agreed upon. When it comes to taxes, unless you filed separately, chances are you are equally responsible to the IRS. If you feel your spouse did something without your permission or understanding, you can file Form 8857, Request for Innocent Spouse Relief, to see if the IRS will absolve you from any liability on the tax burden.
Remember that if your ex files for bankruptcy, you are still responsible for any debt attributed as shared. Unless you file for bankruptcy, your ex’s creditors can come after you for the money.
To hear experienced insight from divorce attorney Jonna Spilbor on splitting your assets during divorce, check out these episodes of Divorce Tips:
