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Do I Have to Share My Spouse’s Debt in a Divorce?

Debt is actually considered a marital asset. Within a marriage, one spouse is the co-owner of anything the other spouse accumulates. This includes both incomes, all tangible assets, and debt.

This fact leaves us with a question: If one spouse racked up debt, is the other responsible for that debt?

The answer to this question depends on how your state divides property in a divorce.

Dividing Debt in a Community Property Division State

Some states still use the “community property” or “equal” property division. This system assumes that each spouse should walk away with 50% of the marital assets.

If either party accrued debt during the marriage, that debt belongs to both parties equally. Both spouses will split the debt along with physical property and money.

In a community property state, equal division can happen several ways. Spouses can sell off property and split the profits. They can also trade physical property until each person has an equal share. One spouse could even simply pay the other for half the value of the property.

There are credible arguments that can make one spouse keep the debt, especially if they created it behind the other spouse’s back. Even in these scenarios, however, the one who keeps the debt may also be allowed to keep more of the assets, keeping everything even.

Dividing Debt in an Equitable Property Division State

Most states use the “equitable” division model. New York is one of these states.

Under this system, the state gives property to the most “deserving” of the two spouses. For instance, imagine a marriage with one stay-at-home parent. This spouse has a strong case to claim entitlement to the home. They will likely retain primary custody, and it will be difficult for them to reenter the workforce. Keeping the home will help them care for the kids and give them a safe place as they look for work.

In an equitable property division state, the person who accumulated the debt will most likely keep it, as it is their responsibility.

Proving Responsibility in Debt Division

Normally, you want to claim “entitlement” to keep certain assets. This means that you must prove you contributed to the asset, or you were that asset’s primary user.

When it comes to debt, you must make the opposite claim. Instead of proving why you must keep something, you have to explain why the other party should.

Doing so can include receipts, purchase histories, and so on. This process can get complicated, and you’ll need the help of a good attorney to keep all these records straight.

In some cases, the debt may be in both your names, even if you didn’t directly contribute to it. You will first need to prove that the other party is responsible for that debt. Then, you must make sure to close that account and transfer that debt to the other person. Otherwise, they can continue to put that account into the red, continuing to hurt your financial record.

Law Office of Tzvi Y. Hagler, P.C. is here to help you achieve a fair property division agreement in your divorce. You can schedule time with us online or call us now at (516) 514-3868.