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How to split debt during a divorce

On Behalf of | Jan 10, 2023 | Divorce, Family Law |

Nearly everyone going into a divorce knows they will divide up assets, but they may not realize that couples also need to divide up their marital debts. From credit cards to mortgages, both parties share the responsibility of repayment. It can be challenging to spread the family income to cover two homes.

The tips on the following topics provide options for effectively managing certain debts during or after divorce.


When married couples make large purchases, such as cars, RVs, boats and off-road vehicles, they might obtain loans to cover costs. Getting divorced does not automatically remove one spouse’s liability from the vehicle loan. To split the debts, couples have two options:

  1. Sell the items, pay off the loans, and split the proceeds equally
  2. One person can request a new loan for the entire amount of the equipment

Individual owners should also retitle the car in their names.

Revolving credit

Credit card debt accrued during the marriage is evenly split, regardless of who made the purchases. The easiest way to accomplish this is to pay off the balances before dividing assets. However, if not possible, both parties can be liable for purchases from the other spouse. One way to avoid this is to apply for new credit cards and transfer equal amounts from the joint account to the new one.

School loans

Who pays for school loans depends on when the loans began. Most debts, including student debt, accrued before marriage would remain the responsibility of the spouse who took out the loan, even if joint funds covered the payments during the marriage. However, loans obtained during the marriage, even if one spouse spent the money, require repayment by both parties. Divorced couples may try getting new individual loans for their half or use profits from a home sale to pay off the student debt.

The home

If the house was purchased or refinanced during the marriage, spouses have equal equity and obligation for that debt. If one plans to remain in the home, it often makes sense to refinance so the other spouse isn’t attached to the mortgage. If the spouse can’t qualify for a loan without a co-signer, both spouses should remain on the title while the occupant services the debt.

Untangling the finances can be a sticking point

Knowing different debt payment options may make managing finances easier after divorce. It is important to remember that spouses are equally responsible for any shared debt remains, which could be a significant problem if an ex defaults on a car or house payment. Addressing these issues during the divorce is essential to avoid headaches once the split becomes final.

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