How to Divide Marriage Debt

When going through a divorce, you'll have to divide the debt you incurred during marriage as well as the property your purchased together. Dividing up debt from marriage is often stressful, particularly if one member of the couple primarily benefited from the debt--such as student loans--or if one person will have a more difficult time repaying the debt. Despite this, you need to work together to fairly divide marriage debt.

Instructions

1

Take stock of your debts. Order a copy of the current debt statements from all of your lenders. Make a note of which debts were incurred by one party--such as student loans, business expenses or hobby-related expenses--and which debts benefited the family--such as home loans and purchases related to the home.

2

Use assets to pay down joint debts. If possible, it's easiest to use your assets--such as money in a savings account or from selling a vacation property--to pay down or eliminate the debt that you hold jointly.

3

Come to an agreement about the best way to divide debt. This will vary widely from couple to couple. One way is to divide things evenly, fifty-fifty. Another way is to divide based on a percentage of income. For example, if one person makes 60 percent of the total income, that person would receive 60 percent of the debt. You should also look at who is to receive the assets from the marriage. You may decide that the person receiving more assets should take on a higher percentage of the debt.

4

Allow the courts to divide the debt if you cannot reach a decision. Some states have community-property laws, which means that the debt will be divided evenly. Others have equitable-distribution laws, which means that the courts will use a number of factors--income, assets received, reason for the debt, among others--to determine a fair distribution.

5

Open accounts in each individual's name. Transfer balances to the new accounts based on the agreement.

6

Close all joint accounts. You do not want to leave these accounts open, because one spouse might use the account for credit, causing the other to be responsible for paying it back.