Divorce and Debt: Which Spouse is Legally Responsible for Marital Debt?

A couple calculating their debtA crucial part of divorce is how marital debt, which is debt incurred by both you and your spouse while you were married, would be divided between the divorcing spouses. In a utopian world, there would be no marital debt, or if there were, both spouses would walk away from their marriage liable for the specific debts they actually created. Sadly, however, we don’t live in a utopian world, so this isn’t always the case.

Who’s Liable for Marital Debt?

In states that follow community property laws, debt incurred by the spouses during their marriage wouldn’t necessarily be distributed based on who acquired the debt. Instead, both spouses might be held equally liable for the marital debt, and it won’t matter if only one spouse incurred the debt and if the other spouse wasn’t aware of it.

In states, such as Colorado, that follows equitable distribution laws, the spouse who incurred the debt would be the only one responsible for it, explains a renowned divorce lawyer in Boulder, CO. They add, however, that if the debt is in your or you and your spouse’s name, you would also be held liable for it even if it was only your spouse that created the debt.

Also, banks won’t care about the divorce decree if a particular debt is under your name, such that you’d still have to finish paying a loan contract or credit card agreement. And this becomes a bigger issue when the court orders a spouse to pay debts that are not in that spouse’s name or if it’s jointly held. For instance, your ex-spouse refuses to make payments on a credit card under you and your spouse’s name even if the court ordered him or her to do so. While you could sue your ex for violating the court order, the non-payments would still negatively impact your credit score.

The Main Takeaway

Marital debt adds more complexity to an already complicated divorce and divorcing spouses have no choice but to stay connected because of it. That said, make sure to clear all debts and close all joint accounts before divorcing. You also need to sort out your finances and perhaps try and work everything out with your spouse to avoid conflict.