The distribution of both property and debts is often a pressing matter of concern during divorce. Many spouses specifically prioritize keeping certain assets. They want to stay in the marital home or retain control over a business run by the couple.
Occasionally, the main objective during divorce negotiations may be to limit responsibility for certain debts. Under community property rules, debts ranging from personal loans and mortgages to credit cards are usually part of the marital estate. In other words, they are subject to division and could impact the division of other assets and debts under community property rules. However, there may be some debts that people can exclude from the property division process.
What financial responsibilities typically remain the obligation of one spouse?
Debts from before the marriage
Many people start marital relationships with substantial debt already accumulated. Professionals who attended college and possibly graduate school may have tens of thousands of dollars or more in student loan debt.
Either spouse may have previously held separate credit cards that had high balances at the time that they married. Obligations that existed before the marriage that are still owed at the time of divorce may be the separate responsibility of the spouse who took on the debt.
Debts that count as dissipation
Typically, any debts accumulated during the marriage are the responsibility of both spouses. However, there are special exceptions for debts taken on intentionally to diminish the marital estate. People preparing to file for divorce might max out their credit cards or completely change their spending practices.
Other times, one spouse may have hidden debt from the other. Financial infidelity, or the practice of lying about spending habits, might lead to the courts agreeing to make one spouse responsible for the debts that they hid from the other spouse.
Debts taken on for purposes that directly damage the marital relationship may also be the responsibility of the spouse who took on the debt. If one spouse cheated, the credit card debt they accumulated paying for hotel rooms and gifts for an affair partner is usually not the responsibility of both spouses. Provided that people can prove how much one person wasted on an extramarital affair, the courts may make one spouse responsible for the debt they accrued while damaging the relationship.
Spouses can sometimes exclude certain debts from their pool of community property and debts. Conducting a thorough financial review with a skilled legal team can help people understand what to expect during the property division process.
