It is not uncommon for a couple to accumulate a substantial amount of debt during a marriage. If they purchase a home, they’ll likely need to take out a mortgage. They may also finance the purchase of “big ticket” items like vehicles and household appliances. Credit cards are another primary source of debt for many married couples, whether the spouses have individual cards or open joint accounts.

This raises an important question: What happens to all this debt during a divorce? Which spouse is responsible for assuming the liability and paying it off? In a perfect world, the two parties would sit down together and find a way to divide the debt fairly and equally. Unfortunately, divorce is often an acrimonious situation where the spouses don’t agree on much of anything — including how to pay back the money they owe. Consequently, the courts often make the final determination regarding the division of marital debts.

Marital Property and Marital Debt in PA

Under Pennsylvania law, marital property consists of property that either spouse acquires during the marriage and before the date of separation. This applies to assets such as homes, vehicles and financial holdings such as stocks, bonds and real estate that are purchased or obtained during the marriage. Additionally, increases in the value of a pre-marital asset may constitute marital property. Examples include interest or dividends on an investment account or the appreciation of a home purchased prior to the marriage.

The same legal concept always applies to any debt that one or both spouses accumulate during a marriage. If you and your spouse purchased a home after getting married, for example, you are both responsible for the mortgage loan even if only one spouse is listed on the mortgage.

So, if you take out a loan in your name only to purchase a car, you and your spouse could be obligated to pay the debt in the wake of a divorce. This also applies to credit cards, personal loans and other debt instruments. Consequently, if your spouse gets a credit card in their name and racks up $10,000 in charges, it’s possible that you could be liable for repaying some of all of the debt, even though you never used the card yourself.

How Is Marital Debt Divided?

Regarding divorce debt, Pennsylvania is an “equitable distribution” state, which means the courts will divide all marital debts (as well as assets) “fairly and equitably.” However, this doesn’t necessarily mean the spouses will share the debt obligation on a 50/50 basis. It’s possible that one party could end up “owning” a larger portion of the debt than the other.

The courts look at each divorce situation on a case-by-case basis when dividing the marital debt. The judge will review a listing of all the debts and assign them, one at a time, to the spouses in the most equitable manner. Factors the judge will consider when dividing the debts include the income of each spouse, the length of the marriage, the standard of living established during the union and the spouses’ age.

It’s possible, for example, that a spouse with a significantly higher income than the other could take on a larger proportional share of the debt load.

Negotiating a Divorce Debt Settlement

You and your spouse can avoid the process of having the courts divide the debt by attempting to negotiate a settlement. If you’re not on good terms with your partner or cannot reach an agreement on the division of the debt, the two of you can enlist the services of divorce attorneys to manage the task. Any agreement should be memorialized in writing so it can become part of the final settlement.

Some couples choose to enter into a prenuptial or postnuptial agreement that stipulates how assets and debts will be divided in the event of a divorce. The former takes place before the marriage, while the latter occurs at some point during the marriage. The existence of either document can also eliminate the need for a judge to determine the division of marital debt during divorce proceedings.

Divorce and Debt Responsibility: Both Parties Are Accountable

It’s important to note that the assigning of a debt to one spouse does not necessarily eliminate the obligation of the other. Suppose the judge assigns a credit card balance to your partner. If they default, the credit card provider can legally attempt to collect from you. If you’re unable or unwilling to pay, it will negatively impact your credit rating.

Contact MPL Law Firm to Learn More

The MPL Law Firm can assist you with any divorce situation in York, PA, including negotiating a settlement for the division of marital debt. We’ll work closely with you to help you achieve the most desirable outcome for your unique situation. Contact us to discuss your legal needs.