When your marriage breaks up, it requires not only a physical separation but a financial one. The former marital residence, cars, retirement accounts and bank accounts all have to be ironed out and distributed. Since very few couples are debt-free, your legal separation process will probably also include the division of marital debt.
Marital and Separate Debt Generally
States divide marital property and debt under the laws of either community property (CP) or equitable distribution (ED). CP states try to divide marital estates equally, whereas ED states seek a division that is equitable, or fair. As "fair" and "equal" don't always mean the same thing, you might find yourself getting less marital property and more marital debt than the other side in an ED state. As both ED and CP states see debt acquired during the marriage by either party the debt of both rather than just one, the name on the debt doesn't really matter.
How Courts Assign Responsibility for Marital Debt
Family law courts generally prefer to make an in-kind division of the marital estate. This means that in pursuit of a desired division, your judge will do what he can to see that you are distributed assets already in your name and debt already in your name. If there aren't enough marital assets to balance off the huge debt load that might follow you out of the courtroom, a judge can sometimes order the other side to make distributive payments to you to help even things out.
Role of Separate Debt
Debt you brought into the marriage, as well as debt you racked up after date of separation or whatever other date your state specifies, is your separate debt, ditto for your spouse. Since it's separate, the court can't make the other party responsible for it. It can still play an important role, however; in ED states, carrying a significant separate debt load can justify an unequal division. In alimony cases, a party's separate debt load can be considered a valid expense, which reduces his ability to pay or increases his need for alimony.
Bankruptcy
The divorce process can hit you with any number of new expenses that make it impossible to carry your debt load. Attorney fees, child support and the sudden appearance of a second set of living expenses can create a situation where even the most financially responsible party can't pay all of his debts. In these situations, the United States Bankruptcy Code can offer some relief. While not every debt is dischargeable in bankruptcy, a Chapter 7 or Chapter 13 proceeding can frequently get rid of enough debt to give you a fresh start.
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