How is debt divided during a divorce?

On Behalf of | Oct 21, 2022 | Divorce

When a Pennsylvania married couple decides to call it quits, the court decides on matters like property division and custody. Another important issue is how to treat debt that was accrued during the marriage. This is how debt is divided in divorce.

Factors determining how debt is handled

Pennsylvania is an equitable distribution state, which means that all debts during the marriage are divided fairly just as marital assets are. This doesn’t mean the debt is divided evenly at 50/50; instead, the court will look at factors such as whose name the debt is in and whether you have a prenuptial or postnuptial agreement.

How specific types of debt are divided

During a divorce, you and your spouse are responsible for debts from during the marriage. However, some debts are handled differently. In the case of credit card debt, you are normally responsible for debts in your name only unless you and your spouse shared a joint account. However, the court will consider whose name is on those debts and decide how they should be divided.

If you’re only an authorized user on your spouse’s credit card account, you will not be held responsible for paying back the debt. If you’re a cosigner because your spouse was unable to get their own account, you may be on the hook for that debt.

Mortgage debt is divided based on whose name the house is in, but sometimes, both people’s names are on it. In that scenario, the court will look at each person’s financial situation and decide how the debt should be split.

Car loan debt in both spouses’ names can be problematic if one party intended to keep the vehicle. If they don’t pay, the other spouse becomes responsible. However, they can sell the vehicle and split the proceeds.

Other loans typically in one person’s name only are that person’s responsibility.

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