Dividing Debt and Credit Card Bills During Divorce

Westport Family Law Attorney

Unless you signed prenuptial agreements (and sometimes even if you did), your financial situation is likely to be one of your primary concerns when making the decision to file for divorce. People often think of divorce in terms of division of property, whether it be personal property, real property, or assets. The underlying debts shared by the marital couple also must be divided upon divorce—a fact that leaves many couples wondering how their debts can be divided equitably.

Equitable Debt Division in Connecticut

Connecticut is an equitable division state, which means that debts, like property, are to be divided fairly between the parties. Despite the term, equitable does not mean equal—there is no requirement that debts be split 50/50—even if that is how the debts were acquired in the first place. The idea is that the individual who incurred the debt should be responsible for paying it. That idea is simpler in situations regarding credit cards, where it is easier to determine who bought what, but more complicated for joint debts such as car loans, mortgages, promissory notes, or private loans.

Credit Cards

Credit card debt is the easiest to divide. With the exception of joint purchase (meals, gasoline for the car, etc.) with the cooperation of both spouses, it is feasible to determine who is responsible for specific purchases. Perhaps only one spouse has a gym membership and pays for it on the credit card—he or she should be responsible for paying that debt. Or, if the couple pays some of their home-related bills or expenses (electric, insurance, water, heat, etc.), then those should presumably be divided between the two equally since they both received the benefit.

If the parties are unable or unwilling to ascertain who bears what debt according to credit card statements, the division will likely be determined based off external factors that govern the division of most property in divorce. In Connecticut, a court may consider:

• The financial situation and future of each spouse;
• Length of marriage;
• Occupation, skills, and future employment prospects;
• The standard of living set by the marriage;
• The contribution of each spouse to the other marital property being divided; and
• Health and general well-being.

These factors help courts decide equitable distribution of all debts, not just credit card debt. The court will also consider whether the burden of debt should be altered due to one spouse receiving a benefit at the divorce, such as possession of the marital home or vehicle. The type of assets, personal or real property being conferred upon one of the spouses may change the outcome of the division of debt for both parties, even if that person was not solely responsible for incurring the debt.

Mortgages

If you and your spouse were co-borrowers on a mortgage, the mortgage debt will haunt you long after you and your spouse divorce if it is not dealt with appropriately. Traditionally, spouses would either sell the property and divide the proceeds, or re-finance the loan in only one of the spouse’s names and "buy out" the other spouse’s interest in the property. However, many people do not qualify for a home mortgage or refinance on a single income and the housing market has not been ideal for sellers in the past several years, making these options difficult for many couples.

Other options include continuing to pay the mortgage together, but this can be difficult to maintain and can lead to unnecessary litigation down the road when one ex-spouse decides they no longer want to pay for the residence. Another approach is agreeing to have one spouse continue paying on the mortgage until the property sells. However, you must remember that if both of your names are on the mortgage and your ex spouse fails to pay, you can become personally liable even if you are not currently living in the home. There are solutions to maintaining a mortgage during a divorce—the best one is dependent on each client’s unique set of circumstances and objectives.

Student Loan Debt

Unless you or your spouse co-signed as a co-guarantor for a public or private student loan, the student loan debt will follow the named individual on the promissory note(s). Note that with private loans, even if the spouse was not originally on the account at disbursement, but later joined the account, they may become liable if the debt is in default. Given the significant burden of student debt, it is important to check and make certain you are not putting yourself in a situation where you could become liable for your ex-spouse’s student debt.

Westport, Connecticut Divorce Attorney

Though resolving debt-related disputes during a divorce proceeding can be complicated, it is entirely possible to come to an amicable resolution if you have an experienced Connecticut debt and property division attorney on your side. Richard H. Raphael, Attorney at Law, has years of experience serving Fairfield County, Connecticut regarding an array of legal matters involving divorce proceedings. He will patiently guide you through the emotional decision to file for divorce and tackle and issues that are raised during the process. He will protect your legal rights and advocate to ensure you receive what you are entitled to and that you do not bear the burden of debts you did not incur. Contact his Westport law office to learn more about taking the first steps toward your new life today. Call 203-226-6168 or fill out the online contact form to schedule a free initial consultation.