How is Debt Divided in a Divorce?
Any debt a couple shared during their divorce may be subject to division, just like any other type of property they owned. In this way, debt is treated like any other asset and may be divided or divvied up in a way that is deemed fair and reasonable in the eyes of the court. However, depending on the type of debt you have, when you acquired it, and why, the way in which the debt is divided may vary.
Property Division Laws
Each state is governed by their own property division laws, and those laws determine how a couple will divvy up their assets if they should divorce or legally separate. In Oregon, all marital assets are divided according to equitable distribution, which means that all property will be divided in a way that is equitable, though not necessarily equal. In other words, one spouse may receive 60% of the assets while the other receives 40%, if the court considers that division “fair” and “equitable.”
Debt is treated as any other property, which means it is subject to division alongside other assets, like the house, cars, bank accounts, etcetera.
Different Types of Debts
Although all debt may be subject to division, certain circumstances may classify debts as separate property rather than marital property. According to the law, any shared assets will be classified as marital property, and will be subject to division when the couple divorces. Separate property, on the other hand, refers to the assets that belong to one spouse alone. Examples of separate property include gifts, heirlooms, and certain assets owned prior to the marriage.
Certain debts, such as student debt or credit card debt, can also be considered separate property. If, for example, a man acquired student debt before marrying, he could be responsible for that debt after the marriage ends. However, if he went to school during the marriage and his subsequent degree helped him earn a larger living for his family, the student debt may be categorized as marital property.
Courts will consider each spouse’s economic situation, as well as several other factors, when determining how debts should be divided in a divorce. Although there are certain rules that may help determine what is most likely to happen in your case, it is important to understand that each case is different and should be treated with personalized attention. If you are going through a divorce and are concerned about how your debts will be divided, Contact McKinley Irvin to request a consultation with one of our family law attorneys.