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Dealing with debt? How it can affect marriage and divorce

On Behalf of | Aug 1, 2018 | Property Division |

When people are in debt, they may not be able to provide they things they want for their kids or buy the home of their dreams. Many people might spend time worrying about how to pay for the things they need at the expense of enjoying time with the family.

Unsurprisingly, this takes a toll on a marriage, and many couples ultimately divorce in the wake of financial troubles. Student loan debt in particular is reportedly a contributing factor in more than one-third of divorces, according to a recent report. If you are in a situation where debt is a factor in your decision to divorce, it can be important to understand how it can also be a factor in your divorce.

Division of assets

One of the most direct ways that debt affects divorce is how you divide it. Because Arizona is a community property state, the law requires “equitable” assignment of marital debt. This usually (but not always) means “equal.” When the court makes an exception, it is usually because one spouse concealed or transferred valuable property behind the other’s back, or significantly wasted marital property for purposes that did not remotely benefit the family, e.g. gambling, drug addiction, etc. This does not mean, however, that you can lay 100% of a credit card debt on the other spouse just because it is in that person’s “name,” or merely because you did not approve of the related charges. In most cases, the family court will not micromanage all your credit card bills to determine which spouse was more fiscally responsible

To resolve their disputes, the parties might equally divide debt obligations between them, or they might negotiate arrangements where one party takes on more debt but also receives more assets to keep the overall value of the division roughly equal.

Method of resolution

Debt will also affect how you resolve divorce-related matters. Rather than go through lengthy, costly litigation, many people opt for out-of-court resolutions like mediation to settle their divorce. They do this because it can be less expensive and faster than going to court.

Life after divorce

After you divide your debts and assets and finalize your divorce, debt accumulated during your marriage can still follow you. Creditors might come after you for your ex’s share of a community debt if he or she falls behind on payments. This is because creditors are not parties to your family court case and not bound by the arrangements made in that arena. They are entitled to enforce the original debt contract.

Avoiding unnecessary complications of debt

Protecting yourself from additional complications stemming from debt can be crucial. You might do this with a prenuptial or postnuptial agreement to identify separate debts. Or, you can negotiate during mediation an arrangement that minimizes potential for post-divorce credit payment penalties for a non-errant party.

Debt puts incredible strain on people, especially during the already-stressful process of divorce. If you are in this situation, understand that you will get through this; there are legal and financial remedies to help you tackle these and other difficult issues so that you can focus on your future.