Debt in Divorce Math…
The more I work with divorcing couples the more I realize how hard the concept of DEBT is to accept. It is one of the reasons divorce math isn’t regular math! You can be married to someone who has really bad spending habits and it impact you directly (your credit score, your wallet & more) even if you were not the one in the marriage who was the spender. How? Depending upon the laws that govern your resident state, debt accumulated during the marriage is marital debt…period… meaning you are both on the hook to pay it off, even if you never used the card and/or your name was never on it. Why? Debt accumulated during a marriage is considered the debt of BOTH parties.
The good news is having good records can help. You may be able to argue or negotiate that you should not be responsible for debts in your marital agreement, if you have good records to prove it. The bad news is you cannot control your soon-to-be ex-spouse and creditors do NOT care what your marital agreement says. Your soon-to-be ex-spouse can continue to spend, putting your credit score in jeopardy. Depending on your resident state, you can “draw a line in the sand” with a date for your marital assets (typically on the Marital Asset Addendum). This date is used to determine the worth of assets/liabilities in your martial agreement. You can negotiate to NOT have certain debts. Remember, much of the marital agreement is a negotiation. It may make sense for you to take some of what you did not create than to WIN the argument by paying your attorney to WIN in court. Court is expensive. Weigh your battle! Sometimes it makes more sense to walk away and pay part of the debt.
Even if you take part of the debt to negotiate in divorce, creditors can still hold you accountable…legally. You may have to take your ex-spouse back to court to enforce your agreement and make them to be responsible for the debt. To protect yourself, have the language in the marital agreement lay out specifically the steps your spouse will take to get your name off the debt so there is no question and a deadline they must have it completed by for accountability. You may consider saying something like “Jennifer will have Larry taken off as a user of her Discover card ending in 0089 within 30 days of this agreement. She will also provide a statement from Discover on her account ending in 0089 showing all debts transferred into an individual account in her name only within 60 days of this agreement." We are not attorneys; your attorneys will provide document preperation and filing.
This is your divorce; make your agreement as specific to the situation as possible.