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What happens to marital debt after a divorce?

On Behalf of | Nov 22, 2022 | Premarital agreement

Most couples make long-term financial decisions that may involve taking on a considerable amount of debt. When they decide to go separate ways, dividing such debt between them is not as easy. 

Mortgages, car loans, medical debt and other joint financial obligations can present a real headache during a divorce. It may be hard to ascertain your share of debt, given that everything is bound to change with the divorce.

Debt is divided equitably 

First, only debt accrued during the marriage (marital debt) is affected. Each spouse’s separate or personal debt remains unaffected. Usually, the court will consider several factors when determining the share of each spouse’s marital debt during divorce proceedings. They include:

  • The duration of the marriage and the circumstances that led to the divorce
  • The age, physical and mental condition of each spouse
  • Each spouse’s economic ability at the time of the divorce
  • The contribution to the family’s well-being, both economic and non-economic

Upon a review of these and other factors, a judge will fairly divide the marital debt and assign each spouse their share. It does not have to be equal, which is what equitable division is all about.

Creditors can still come after you

Divorce does not void the legal contract you had with a creditor or lender. Should your spouse default on a debt that has your name on it, creditors can hold you responsible. It could also hurt your credit score. You can address this in various ways, such as renegotiating the lending agreement with the creditor and removing your name from the loan.

Protecting your interests

There are several methods you can use to avoid marital debt issues during a divorce. A prenuptial or postnuptial agreement is one of them. A well-drafted and legally binding agreement will help handle debt division. 

If it is too late for such an arrangement, you should strongly consider mediation in your divorce. It is much easier to handle such financial matters when you are both reading from the same page, and can settle matters amicably.