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What happens to your debt in divorce?

Debt is a reality for many people, whether it is from student loans, their credit card or their mortgage.

However, this reality can become a complex issue when spouses file for divorce. Spouses must divide debts along with their assets in the property division process, but it can often be a challenge.

How spouses divide debt will depend on their circumstances, but here is a general overview of the process for dividing debt in a divorce.

How do spouses divide debt?

Debt accrued before marriage is often not subject to division during divorce. But debt that spouses accrue during the marriage is marital property, and therefore must be divided between the spouses.

Virginia’s property division law specifically includes the division of debt. So, spouses should consider the same factors when dividing both property and debt. When it comes to debt, spouses should primarily consider:

  • How much each spouse contributed financially during the marriage;
  • How they divided financial responsibilities during the marriage;
  • How the marital debt was accrued;
  • Each spouse’s liabilities and debts; and
  • Each spouse’s financial needs and abilities to pay debts after the divorce.

If spouses earn similar incomes, they might divide debts 50-50 to be fair. Otherwise, Virginia’s equitable distribution rules might have the higher-earning spouse take on a larger portion of the debt.

Dividing larger loans often requires additional steps. For example, if one spouse is keeping the family home, it is often necessary to refinance the mortgage into their name. The other spouse might still contribute to paying their portion of the mortgage through spousal support.

Liability for debt may depend on the original loan agreement

It is important to note that the original loan or credit card agreement overrides the details determined in the divorce settlement agreement. If the loan agreement says both spouses share a joint responsibility to repay the debt, they still share that responsibility after divorce.

In these cases, it might be beneficial to make a plan to pay off the debt and divide responsibilities before the divorce.

It is no secret that financial issues can be a significant stressor in a marriage. They can cause the same stress in divorce as well, but you can rely on the experienced attorneys at Bowen Ten Cardani, PC, to help protect your finances and your future throughout every step of your divorce.

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Bowen Ten Cardani, PC

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Richmond, VA 23233

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Phone: 804-767-6850
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