Financial issues are one of the leading causes of divorce. Many couples find themselves disputing how to split up their assets, leading to a contentious battle between both parties. Though most people focus on the assets, it is important to remember that divorce may raise issues related to your debts as well.
Dividing property in a divorce involves categorizing your assets and debts into separate and marital property. In a nutshell, whatever you and your spouse brought into the marriage is usually considered separate property. Whatever you accumulated during the marriage is marital property, but debt is handled differently.
Our clients often ask us if they are responsible for debts their spouse accrued during the marriage. The answer to this depends on the circumstances. Following are a few situations and how division of debt might work.
Was it pre-marital debt?
If your spouse brought their own debt into the marriage – like student loans, their own credit card debt, or personal loans – they are responsible for it. Anything a person accumulates before a marriage, assets or debt, is viewed as separate property and will be assigned that way by the court.
On the other hand, if your spouse incurred the debt during the marriage, you may be partially or even fully responsible for paying it off.
Whose name is on the debt?
Once you have determined which debt is separate and which debt accumulated during the marriage, the next step is identifying whose names are on each account. If you and your spouse have a joint account, you are both likely required to make payments. However, if one spouse simply stops making payments, the other spouse might be stuck with collections coming after them.
Sometimes a spouse will put loans and/or credit cards in their name only. Reasons for this can include bypassing their spouse’s bad credit, avoiding being responsible for their spouse’s debts, or any other number of reasons. Maryland courts typically do not reassign debt from one spouse to another, so if your name is the only one on the loan, you are solely responsible for the debt. This is true even if you didn’t make the purchases. (Unless you’re dealing with fraud, which is a criminal matter.)
Is your spouse an “authorized user” of your credit card?
If your spouse was unable to open a line of credit on their own and you added them as an authorized user on your card, you are taking on the responsibility of their debt. An authorized user can use your card, but in the event of a divorce or dispute, the name of the cardholder is ultimately responsible for the accumulated debt.
Keep an eye on your credit score
A small piece of advice when it comes to debts: creditors may not care about which debt is marital or separate, but they will care about getting their payments. If both parties are supposed to pay but your ex fails to keep up his or her end of the bargain, you could be left suffering the consequences.
Therefore, during and after your divorce, check your credit score – especially if you are worried your ex will not uphold their required payments. Their failure to pay can affect your ability to get a loan in the future. An attorney can help you enforce your divorce agreement if necessary.
If you have any questions about asset and debt division, the Fulton divorce attorneys at McCabe Russell, P.A. provide knowledgeable guidance. To schedule a consultation, call 443-917-3347 or reach out to us through our contact form. We maintain additional offices in Rockville, Columbia, and Bethesda.