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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.