What Happens to Debt After a Divorce?

Divorce is a difficult experience at best. There are so many different threads tied together, it makes unraveling them typically pretty unpleasant. One of those strands that often need attention is debt. Here are two things to know about debt after a divorce, and what happens to common types of debt when a marriage is ended.

State Factors

 One of the key factors in deciding what happens to debt after divorce is where you live. If you live in a community property state, generally speaking, any marital debt you have is divided equally. These states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

Timing Matters

When you accumulate your debt matters a lot. The debt you add before your wedding is considered personal debt. The debt you add during your marriage is considered marital debt, and therefore must be dealt with during divorce proceedings.

Breakdown of Debts

Different kinds of debt should be addressed differently. Here’s a breakdown:

• Credit Cards. What happens with credit card debt is dependent on who signed for the card. If both of you have signed the credit card agreement, then you’re both responsible for the debt. If the card is only signed by one person, the debt falls on that person.
• Mortgages. Just like with credit card debt, any mortgage debt is dependent on who signed the loan. In most cases, both parties have signed, so both pirates are responsible for the debt. This is true even if the house is assigned to one party — you will both have to continue paying off the mortgage.
• Student Loans. Because student loans are typically owned by one person, it is up to them to clear the debt after the divorce.