What Happens to Mutual Debt After Divorce?

If you’re currently in debt, you’re in good company. According to Pew Research Center’s most recent findings, approximately 80 percent of Americans owe money to lenders and creditors. And while being in debt is stressful in and of itself, a large number of debtors find themselves faced with the complexity of being forced to figure out how to manage what they owe after a divorce. Fortunately for those getting divorced in Arizona, the state’s laws on mutual debt are rather cut and dry. Even so, it’s important to arm yourself with the facts and in your best interest to have a knowledgeable attorney on your side. Here’s a quick overview of what happens to mutual debt after a divorce.

The Division of Debt in Arizona Divorces

In Arizona, marital debt is treated in the same manner as marital property. Just as any type of community property is considered to be equally owned by both spouses, the state also views marital debt to be “owned” equally by both parties. In the simplest terms, all marital debt that exists shall be divided equitably between the two individuals. Because certain complications can arise when considering what constitutes an “equitable division” of debt, it’s wise to enlist the help of Schill Law Group to help you sort through the details.

 Marital Debt Defined

In order to equitably divide marital debt, we must first establish what “marital debt” actually is. In Arizona, marital debt is defined as any sort of debt that was taken on throughout the course of a marriage. It does not matter which spouse acquired the debt, as long as it was acquired while the parties were married to one another.

It’s important, too, that you understand that your name doesn’t need to be specifically tied to any debt in order for you to be held responsible for it. As an example, your ex may have opened a credit card in his or her name and accumulated debt. This can still be viewed as marital debt – even when your name is not on the card – if the debt was acquired during the marriage.

This would be a different story altogether if the card had been opened prior to the beginning of the marriage. In this case, the debt tied to the credit card would remain the sole responsibility of the individual who opened the line of credit. For this reason, it’s very important to establish the dates when specific lines of credit were opened, and by whom.

There are certainly some exceptions to general marital debt guidelines like these, and your attorney can help walk you through any special circumstances or conditions. Your attorney will discuss the specifics of all types of marital debt that could exist within your marriage including:

• Credit Cards
• Mortgages
• Auto Loans
• Tax Debt
• Personal Loans
• Payday Loans

Settling Marital Debt Disagreements 

In the event that you cannot come to an agreement on dividing your marital debt, the court will make a decision for you, and this may or may not work in your favor. Consequently, it’s always in your best interest to come to an agreement with your ex regarding how your marital debt should be divided. Your attorney can help you come up with fair and reasonable terms regarding the division of marital debt. During this process, your legal representation can help you understand your rights and responsibilities, as well as those of your spouse so that you can achieve the best possible outcome.

Acquiring assistance with the division of marital debt in your Arizona divorce is always a good idea The experienced attorneys at Schill Law Group can help. We have extensive experience in this area and will work to ensure that you receive fair treatment throughout the divorce litigation process. Give us a call to set up a free consultation today.

The Fundamentals of Asset Division in Divorce Cases

One of the biggest issues involved with any Arizona divorce is the division of a couple’s assets. This process involves correctly identifying what those assets actually are, determining which assets are considered to be community property or separate property, valuing all community assets, and finally dividing all community assets equally. Because this is a sensitive topic and can quickly become quite complex, it is often advisable to work with an attorney as you divide your assets. Here’s a closer look at what is involved with the process, from start to finish:

Identifying Your Assets

In order to properly divide up your assets, all parties must be aware of what assets are currently being held. To get the most accurate information, Schill Law Group typically requests that their clients provide an inventory of all assets, including real estate holdings, vehicles, businesses, household goods with substantial value, and retirement and/or investment accounts. Tax returns are another great source of information for this process. Arizona law requires both parties involved in a divorce to disclose their assets and financial holdings. In the event that your ex does not willingly disclose this information, your lawyer may need to subpoena the other party so that all assets can be properly identified. It’s important to remember that debts are treated in the same manner as assets and should, therefore, be included in this process.

Categorizing Your Assets 

Once all assets have been documented, it’s time to determine whether they are categorized as community property or as sole and separate property. Only items classified as community property can be divisible in an Arizona divorce. Generally, community property will include all assets required by either spouse throughout the duration of the marriage. Sole and separate property covers any assets that were brought into the marriage by one spouse or any assets that were gifted to only one spouse during the marriage. Categorizing your assets can become confusing and complicated when mixed assets are involved. For example, a spouse may have brought a 401(k) retirement account into the marriage but the account continued to grow throughout the marriage. While the pre-marriage balance is considered to be sole and separate property, anything accrued throughout the marriage is considered to be community property.

Valuing the Community Assets 

After you have determined which assets are classed as community property, you are ready to value these assets. While bank and financial accounts can be valued via statements, other items like real estate, businesses, jewelry, or fine art may need to be appraised.

Dividing the Community Assets 

The final step is the actual division of community assets. In some cases, both parties are able to work with their attorneys and mediators in order to come to an agreement concerning how the property will be divided. In others, a judge will need to make the final determination. Either way, Arizona law requires that community property be divided “equitably,” meaning that the division should be substantially equal. It should be noted, however, that a judge also has the discretion to make determinations about the true equitableness of each case. In addition to this, a judge may rule on an unequal division of assets to an “innocent” spouse in scenarios where a “guilty” spouse tries to hide or conceal assets.

Navigating the waters of division of assets in Arizona can be overwhelming, complicated, and stressful if you go it alone. Working with an experienced divorce attorney will simplify the process so that you can move on with your life more expediently. Let the team at Schill Law Group help you through this difficult time. Give us a call to get started today.