Spousal Debt Responsibility

Separating couples must deal with issues of spousal support, child support and custody as well the division of their marital estate. While people tend to think about property division in terms of splitting up their assets, the debt division aspect is equally important. A party can be held responsible for some or all of the other party's debts in a divorce case.

Community Property and Equitable Distribution

States divide a couple's marital property and debt under the laws of either community property or equitable distribution (ED). The key difference is that community property jurisdictions divide property and debt equally, while ED courts have to divide it equitably, or fairly. Equitable and fair are not always the same thing, and so ED laws have a list of "distributional factors" that justify an unequal division in some cases. Both types of jurisdictions derive a net value of the marital estate by adding marital debt and property together. If a couple has more marital debt than marital property, the court will focus on equally or equitably dividing the debt. The name on the debt does not matter; if the debt is marital, the court can distribute it.

What Constitutes Marital Debt

Each state has its own definition of what constitutes marital property and debt. Marital debt generally consists of all debt acquired by either party between date of marriage and either date of separation or another date set forth in state law. Regardless of whose name the debt appears in, it will usually be marital if incurred between those two dates. A debt a party acquired before marriage or after the state's specified end date will be that party's separate debt and the court cannot order the other side to share in it.

Responsibility for Separate Debt

Although family law courts cannot distribute separate debt, the existence of separate debt by either party can still play an important role in the case. In ED states, the appearance of significant separate debt can constitute a distributional factor that influences whether or not the court makes an unequal distribution of the total estate. In terms of alimony, having separate debt makes a party more of a dependent spouse and less of a supporting spouse in the dependency analysis, as valid debt service obligations can be considered a valid expense.

Bankruptcy

A party can discharge marital debts, including his debt responsibility to an ex-spouse, by filing a Chapter 13 bankruptcy. If he follows proper notice procedures, a Chapter 13 can result in the unenforceability of a community property or ED judgment entered in the divorce case, and it can prevent the entry of a judgment if the case is still open. A party usually can no longer discharge his debt responsibilities to an ex-spouse in Chapter 7, although this prohibition is not absolute. In both types of bankruptcies, though, the debtor can discharge his responsibility to joint creditors, which means they will then look to the nonbankrupt, co-debtor spouse for payment.