One of the principal challenges in any divorce is how to divide what is referred to as the “marital estate.” While most people focus on assets such as the house or cars, this also includes any debts incurred during the marriage. For many, this can be a rather unpleasant and unexpected surprise. For many couples, deciding what to do about the debt they accumulated during marriage involves a complicated tangle of legal issues and practicalities. An experienced attorney from Seattle Divorce Services can help you get through this process so that you can move forward with your life.
How Community Property Applies to the Division of Debt in Divorce
Community property states prevent one spouse from becoming impoverished as a result of the divorce. However, as mentioned above, the same laws also include debts. This means that you may be held liable for your spouse’s debts even if you did not incur the debt. For example, there is a presumption that you should be jointly responsible for your spouse’s car loan even if the title to the vehicle is solely in his name.
That said, it is a common misconception that the court will divide all debts equally. Instead, the court will attempt to reach a division that leaves both spouses more or less on the same footing. As a result, the court will consider various factors when dividing debt, such as whether the debt was kept secret or whether it was for the sole benefit of one of the spouses. But unfortunately, the fact remains that you may be jointly liable for your spouse’s credit card debt, even if your name is not on the bill.
Debts Incurred Before the Marriage
Washington state law is clear that one spouse cannot be held liable for the other spouse’s debts that they incurred before the marriage. While most of the debt is typically incurred during the marriage, this can come as a relief because these debts can be significant when it’s something like student loans. That said, your spouse may attempt to make you responsible for these debts or try to use them as a basis for avoiding responsibility for other marital debts.
Divorce Does Not Affect the Terms of Your Loans
While all debts incurred during the marriage will be considered when dividing the marital estate, your divorce will not relieve you of any legal obligation you may have for various loans. Any legally binding agreements that you made with third parties before your divorce will not be affected.
For example, if you and your spouse purchased a house together, you may remain legally responsible for the mortgage even if your spouse is responsible for making the payments pursuant to the divorce decree. If your spouse defaults on their payments, the mortgage company could still foreclose the loan and even hold you liable for any remaining balance due. It is important to remember that any defaults, or even late payments, will also be reflected on your credit report.
For this reason, many divorce lawyers will counsel their clients to refinance any outstanding loans to get them into one of the spouse’s names, depending on who will retain the asset. This is especially important when it comes to things like your vehicle or your home. An experienced divorce attorney can help you negotiate an agreement with your spouse to make sure you are in a financially secure position moving forward. Regardless, you need to make sure that your spouse takes the steps necessary for this to happen because you will remain responsible until it does.
Once your divorce is finalized, any debts incurred will be the sole responsibility of the spouse that incurred them. This makes sense because, at this point, you will no longer be married and should have your own bank accounts, bills, and other financial obligations.
However, debts that accrue after you separate but before you are divorced are more complicated. Divorces become much more adversarial when one spouse takes on additional, significant debt without consulting the other spouse. While taking on some debt may be unavoidable, you should make the other party aware and consider how it should be handled as part of the property division. Usually post separation debts will be awarded to the person that incurred them, but there may be reasons such as debt incurred for mutual benefit that would result in a different treatment.
An attorney can provide some helpful guidance and even discuss arrangements with your spouse and their attorney in these situations. This can help your divorce case proceed more smoothly and hopefully with fewer unpleasant surprises.
How a Divorce Lawyer Can Help
In addition to what we have mentioned so far, it’s important to remember that the parties can always come to an agreement on their own. If you and your spouse can agree to divide your debts in a way that is agreeable to both parties, it can save you time and money that would otherwise be spent in litigation. In addition, it is highly likely that the judge will approve your agreement. If you want to avoid a high-pitched legal battle over dividing your debts, collaborative divorce or mediation may be viable options. Your lawyer can help you decide which option is right for you.
Worried About Divorce and Marital Debt? Contact Seattle Divorce Services
While divorce is about more than just money, money is important for your post-divorce future. Unfortunately, many divorces stall when the parties can’t agree on how to divide their property and debts. At Seattle Divorce Services, our family law attorneys help our clients take control of their future by explaining their options and serving as passionate advocates. Both inside and outside the courtroom, our attorneys know how to make a difference and how to get fair results. To discuss your case and how we can help, contact us today at 206-784-3049 or fill out our online contact form to schedule a consultation.