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Debt and Divorce: Who has to Pay?

debt and divorce

It is common for couples to accumulate property, as well as, debt throughout their marriage. When couples decide to divorce, they must also decide how to split their property and, sometimes, their debt. Dividing debt and property in Maryland can quickly become complex and extremely problematic and often requires professional intervention. This blog aims to clarify how debt and divorce is handled in a Maryland.

Can the Court Divide Debt During a Divorce in Maryland?

Marital vs. Non-Marital Debt

In Maryland, debts are categorized into two main types:

  1. Marital Debt: These are debts incurred during the marriage, regardless of whose name is on the account. Common examples include mortgages, car loans, and credit card debts. These debts are typically subject to division during the divorce process.
  2. Non-Marital Debt: These are debts incurred before the marriage or after the date of separation. Additionally, debts that are explicitly stated as the responsibility of one spouse in a prenuptial agreement are considered non-marital. These debts remain the responsibility of the individual who incurred them.

While the Court can equitably distribute real property, vehicles, bank accounts, and retirement assets among the spouses during a divorce, the Court does not have the power to settle joint or individual debt unless it is a marital debt. Because credit card debt is unsecured debt and is not tied to real or personal property, the Court cannot equitably divide this form of debt. Therefore, if you and your spouse put all of the credit card debt in your name, you will be legally responsible for it going forward.

How to Handle Debt During a Divorce

Divorcing with debt can negatively impact your future finances, leading to poor credit scores and the inability to obtain necessities, such as vehicle loans, new mortgages or maybe even to rent. It is imperative to be aware of your rights regarding your specific situation when divorcing with debt and dividing property between you and your spouse.

An experienced divorce attorney can advise you of your legal options. Some possibilities include the following:

    • Pay off marital debt from combined assets before dividing these assets to either party.
    • Have a Collaborative Divorce Attorney or Divorce Mediator create a comprehensive agreement between you and your spouse on how the debt is to be divided upon the divorce.
    • Divide and transfer joint debt into individual debt.

Divorce is never easy, and dealing with debt can add an additional layer of stress. In Maryland, the equitable distribution approach aims to divide debt fairly, but the outcome depends on various factors and the specifics of each case. An experienced divorce attorney at Jacobson Family Law can assist you in navigating the complex issues of debt and divorce and assist you in reaching solutions that will be in your best interests.

If you have debt and are facing a divorce in Maryland, contact us at Jacobson Family Law to schedule an initial consultation with an experienced divorce lawyer.

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