When going through a divorce, dividing debt is just as important and emotionally charged as dividing assets. In equitable distribution states like Kentucky, Ohio and West Virginia, courts aim for a fair (not necessarily equal) division of both property and debt.
Classifying debts
Just like property, courts categorize debt in a divorce as either marital or separate:
- Marital debt includes obligations incurred during the marriage for the benefit of the marriage or household. Examples include mortgages, car loans and joint credit cards..
- People typically incur separate debts before the marriage, or for purposes that did not benefit the marriage. Examples include an individual’s personal loan or a business loan used exclusively for a separate enterprise.
In equitable distribution states, courts look at the overall financial picture when dividing debt. They consider:
- Who incurred the debt and why
- Each spouse’s income and ability to pay
- How parties are dividing assets
- Whether someone ran up debts bad faith
Below are some examples of how the courts may divide different types of debts:
- Credit cards are often marital debt, especially if both parties used the account or one person used it for marital expenses.
- Mortgages and car loans usually go to the spouse keeping the property.
- Courts increasingly consider whether a student loan was of benefit to the marriage. If a couple relied on the student’s future income or made loan payments using joint funds, courts may treat it as partially marital.
- If someone created or grew during the marriage, business debts may be partially marital, especially if both spouses contributed to the business or invested in it.
- Courts often split joint tax debts proportionally, though courts may assign more to the higher-earning spouse.
Keep in mind that every case is different. Specific outcomes and court decisions vary widely.
What about creditors?
Creditors don’t care what your divorce decree says. In other words, both spouses remain legally responsible for debts you incurred together, even if the court assigned it to one spouse in the split.
This means if your ex fails to make payments, their delinquency could damage your credit. That’s why it’s critical to refinance or pay off joint debts whenever possible, close joint accounts and monitor your credit reports regularly during and after the divorce.
Debt division can be one of the most difficult aspects of divorce, especially when emotions are high. Taking enough time to understand how courts see, assess and divide debt can reduce confusion and conflict.
