Debt and Divorce

How is the Debt Incurred During the Marriage Divided?

In addition to the property acquired during the marriage, the debt incurred during the marriage is divided upon divorce. Dividing the debt upon divorce determines who is responsible to repay the debt.

If both spouses co-signed for a debt, both spouses will probably be held to "joint and several liability" for the debt. "Joint and several liability" means that each spouse is responsible for the entire debt, but also the spouses are jointly responsible for the debt. When a joint and several liability is divided, the debt is attributed to both spouses. Often, however, one spouse is made responsible for the entire amount of the debt. This is generally offset by an "equalization" payment; that is, the spouse who pays the debt receives more property in the settlement than the spouse who is left free from the debt.

In some states debts that were incurred for the benefit of the family are joint and several liabilities of both spouses. For example, housing, furniture, furnishings for the home, child care and children's doctor expenses would be considered as being incurred for the benefit of the family. Since both spouses benefited from these family expenses, both spouses would be responsible for the repayment of these debts.

Expenses that were incurred solely for the benefit of one spouse, such as a vacation for one spouse, or a hobby of a spouse, may be left as the responsibility of the spouse who obtained the benefit. However, in most community property states, both spouses are equally responsible for the repayment of debt incurred during the marriage, even if only one spouse enjoyed the benefit.

Typically, the debts that one spouse brings into the marriage (separate or non-marital debt) remain the responsibility of that spouse. In special circumstances (in community property states), both spouses can be held responsible for separate (non-marital) debt.

When a joint tax return is filed, the Internal Revenue Service holds both spouses to joint and several liability for the tax.

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