By Susan M. Keenan ©2006

Along with marital assets come the marital debts.  Whether the couple has been married a long time or just a short while, debts are sure to exist.  Sometimes the debts are small and sometimes the debts are large.  No matter what they are, someone has to come up with a plan for dividing the debts.

The first step that a couple should take to determine the marital debt is to acquire a copy of their credit reports.  These reports will list all of the current debts.  The three major credit reporting agencies, Trans Union, Equifax, and Experian, offer a free report once each year.  That entitles every consumer to three free reports in a single year, every year.

Obtaining the credit reports can show you all of the debt, even debt that your spouse may have been running up without your knowledge.  If you aren’t aware of this and it does exist, then you could be in for a big surprise.  It would be better to get the surprise now, before the division of assets and debts, rather than later.  Beginning over is going to be difficult enough without saddling yourself with additional debt.

Follow these guidelines to aid the process of determining who pays what:

  • Once you have the reports and have identified the debts, take steps to prevent more debt from occurring.  Both individuals need to commit to no more spending on credit.  The best way to do that is to cancel the credit cards.
  • Use whatever marital assets are available to pay off as many of the credit cards as possible.  Start with the smallest balance first and work your way up to the largest balance.  This makes more sense than paying off the largest debt first, since you will be able to close more credit card accounts.  As soon as a credit card balance is paid off, cancel the account.  Ask for a written response that states the account is closed.
  • If necessary due to the fact that available cash has been used entirely, sell off any marital assets that are luxury items in the sense that you can live without them.  Use this additional source of money to continue to pay off your marital debts.
  • Consider taking responsibility for the debts in exchange for a greater portion of the marital assets.  However, if the account is a joint account, you will need to arrange to change that in order to prevent the possibility of more debt being charged to it.  Having the account frozen is probably the best way to arrange this.
  • Consider having your spouse take responsibility for the debts in exchange for a greater portion of the marital assets.  However, if the account is a joint account, you still need to arrange to change that in order to be fair.  Having the account frozen is probably the best way to arrange this.
  • The least favorable solution to marital debt during a divorce is to share the debt equally.  This looks and sounds good on paper, but if your spouse cancels on the deal and decides not to pay, you are stuck with the financial responsibility of paying off that debt.

It is extremely important that you consider all areas of debt when dividing the debt up equally.  Don’t forget to consider installment plans for dental or medical procedures along with the more apparent credit card bills and car loans.

It is important to have your lawyer enter any arrangements into the agreement in order to protect yourself from getting stuck with more debt than you can handle.  Even if the divorce is an agreeable one and both parties have decided that it is the best solution to your troubles, you may not want to rely on verbal promises.