When most people think about divorce, they focus on dividing assets like homes, savings, and retirement accounts. But what about debt? Whether it’s a mortgage, credit card balance, or student loans, debt plays a significant role in the divorce process. Just as dividing assets can be complicated, deciding who is responsible for which liabilities requires careful consideration.

At Blake & Pulsifer, PLC, we can help you divide your debt during a divorce to ensure that you’re not left paying more than your fair share. Our Tempe divorce lawyers will take the steps to protect you financially and safeguard your future – even when you must divide debts and liabilities.

How Debt Is Divided in Community Property States

In community property states like Arizona, debt division is designed to be fair, but that doesn’t always mean it’s a 50/50 split. Instead, the court will consider factors like excessive, abnormal or fraudulent expenditures, and the nature of the debt when determining who should be responsible for paying it.

Community Debt

Debts taken on during the marriage, such as a mortgage, car loan, or credit card balance, are usually considered community debt. Even if only one spouse’s name is on the account, the debt may still be divided equally.

For example, if one spouse uses a credit card solely in their name to pay for family expenses, the balance may still be split between both spouses during the divorce.

Separate Debt

Not all debt is considered community. If one spouse racks up personal debt for things unrelated to the marriage (like drugs, gambling or new romantic interests), the court may assign that debt solely to the individual who incurred it..

Secured vs. Unsecured Debt

The type of debt also matters:

  •     Secured Debt (e.g., mortgages, car loans): These debts are tied to specific assets. Usually, the spouse who keeps the asset (like the home or car) will also take on the associated debt.
  •     Unsecured Debt (e.g., credit cards, medical bills): These debts are not tied to an asset and are typically divided based on fairness and the couple’s financial situation.

Handling Specific Types of Debt

1. Mortgage Debt

If the couple owns a home with a mortgage, there are a few ways to handle this:

  •     One Spouse Keeps the Home: The spouse who keeps the home typically refinances the mortgage in their name alone and takes full responsibility for the debt. The spouse who keeps the home is typically expected to pay the other spouse one-half of the equity in the home at the time of the divorce.
  •     Sell the Home: If neither spouse can afford to keep the home or the parties are unable to agree on which one will keep the home, they may agree (or the court may order) that the home be sold, pay off the mortgage and other debts, and split any remaining equity.
  •     Co-Ownership: In rare cases, divorcing spouses agree to keep the home jointly, with one spouse living there and being responsible for the mortgage and other expenses, without having to refinance and pay the other party at the time of the divorce.  Usually such arrangements last a certain number of years (e.g., until the youngest child graduates from high school), at which time a refinance or sale must occur and the equity divided.  

2. Credit Card Debt

Credit card debt is often one of the trickiest liabilities to divide because it may include both personal and joint expenses. Courts will look at how the debt was used. For instance:

  •     Outstanding debt for family expenses, like groceries or medical bills, existing at the time the petition for divorce is served is typically divided equally.
  •     Debt used for personal purchases unrelated to the marriage after the petition for divorce is served are typically assigned to the individual who incurred it.

3. Student Loans

Student loan debt is often considered separate, meaning the spouse who took out the loan is responsible for repaying it. In truth, student loans are community debts if they are incurred during the marriage, and separate debts if incurred before the marriage or after the divorce petition is served.  Despite this general rule, whether the court divides responsibility for a student loan is often determined by how the student loan proceeds were used during the marriage.  If the loan money was used to pay strictly one parties’ tuition and that party is now successful in that career, responsibility for that loan often goes to the party whose education was paid for with the loan.  If the loan money was used to pay mainly the parties joint and community expenses (like mortgage payments on the house, car payments, food and clothes for the children, etc.), the loan will often be divided equally. 

4. Medical Debt

Medical debt is another form of debt that can be separate or community, regardless of which party incurred the debt, depending on when the debt was incurred.  As with other community debts, if the debt still exists and  it was incurred between the date of marriage and the date the petition for divorce was served, it is typically split between the parties at the time of the divorce.

What About Co-Signed Loans and Credit Score Impact?

If both spouses cosigned a loan, like a car loan or a home equity line of credit, they are both legally responsible for it—even after the divorce. If one spouse fails to make payments, the lender can pursue the other for the balance.

Divorce can indirectly impact your credit score if debts assigned to your ex-spouse go unpaid. Even if the court orders your ex to take responsibility for a debt, lenders aren’t bound by the divorce decree. You could still be held accountable if your name is on the account.

Contact Our Tempe Divorce Attorneys Today

Dividing debt during divorce is about more than numbers—it’s about creating a financial plan that works for your future. If debt is a major concern in your divorce, don’t navigate it alone. At Blake & Pulsifer, PLC, our family law attorneys in Tempe understand the complexities of dividing debt and liabilities in a divorce. Whether you’re concerned about protecting your credit, handling joint accounts, or negotiating fair terms, we’re here to help.

Contact Blake & Pulsifer, PLC., at 1-480-838-3000 or fill out our confidential contact form. We’ll help you create a plan to divide liabilities fairly and move forward with confidence.