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Dividing Debt Upon Divorce
Amid the stress and emotion of a divorce, how to divide the accumulated marriage debt is probably the last thing on your mind.
March 17, 2011 /Personal Finance PR News/ -- Amid the stress and emotion of a divorce, how to divide the accumulated marriage debt is probably the last thing on your mind. Dealing with your emotional health, developing a child custody and support plan, and deciding who gets the house or car all probably take precedent over the division of debt.
Arizona is a community property state. In general this means that any property that was accumulated during the marriage will be divided between the divorcing spouses, and this includes debt. While there are exceptions, most debt that is acquired during the marriage belongs to both spouses; regardless of the fact that only one spouse's name may be on the debt.
By and large, any debt that an individual spouse incurs before the marriage or incurs after the divorce petition is filed will belong to that individual spouse. There may be instances when this general rule does not hold true and creditors may hold a spouse accountable for debt that would normally not be his or her responsibility.
Courts generally prefer that a divorcing couple come to an agreement on a joint debt distribution plan, usually through a form of alternative dispute resolution. If a joint debt distribution plan cannot be agreed upon, the court may ask each party to submit a proposed debt distribution plan for its consideration.
If an agreement is not reached and a marriage dissolution agreement is silent on the allocation of debt, then the spouses will be jointly and severally liable for the debts -- meaning either spouse can be held liable for an entire community debt by a creditor, leaving that spouse to collect the other spouse's proportion of the debt from the other spouse.
Depending on circumstances, the division of debt following a divorce may be very complex. To understand your rights and obligations, speak with an experienced family law attorney.
Article provided by Bishop Law Office
Visit us at www.bishoplawoffice.com
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