How is debt divided in divorce?

Community property vs. equitable distribution

How debt is divided in divorce depends on whether you live in a community property state or one with equitable distribution. A community property state divides debt and assets equally, while equitable distribution states take extenuating factors — such as income, occupation and when the debt was accrued — into account. Most states use equitable distribution.

Community property

In community property states, assets, earnings and debts acquired during marriage are equally owned by both spouses. Separate property remains with the original owner, but if mixed with joint assets (commingling), it may be considered community property. Courts may factor in fault or income, but division typically starts as a 50/50 split.

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Equitable distribution

In equitable distribution states, property is not divided equally but fairly, based on a judge’s assessment. A judge will examine each spouse’s earnings, assets and any existing agreements. Also of consideration is the length of the marriage, the age of each spouse, whether there are any children and each spouse’s conduct throughout the marriage and divorce process. A judge may order asset liquidation to ensure a fair split, and fault can still play a role—even in no-fault states.

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How different debts are treated in equitable distribution states

There are generally two types of debt: Marital debt is all debts and obligations incurred during the marriage; separate debt is debt incurred pre-marriage or post-separation. Marital debts can be treated differently depending on the type.

• Credit card debt: The responsible party for credit card debt typically depends on who signed up for it. If both spouses are named on the debt or if the debt was used to benefit the family, it could be considered community property. Otherwise, credit card debt generally belongs to the person whose name is on the bill.
• Home mortgage: Similarly, if both spouses are listed on the mortgage, they are often both considered responsible for the debt unless the property is sold or refinanced by a single spouse. If a home is listed in just one person’s name, that person does not automatically assume ownership — a judge may consider income and marital contributions before determining who is responsible.
• Auto debt: Usually, one person assumes responsibility for a car loan. If this is the case, be sure to transfer ownership and update the vehicle registration to match the single owner. Otherwise, you could be liable for any fees or incidents in the future.
• Student debt: Student debt is often considered separate debt unless it was accumulated during the marriage.
• Medical debt: Medical debt is also typically considered personal debt. However, courts typically consider whether the debt was incurred during the marriage and make an individual ruling from there.

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What is a prenuptial agreement

A prenuptial agreement (prenup) is a legal contract made before marriage that outlines how assets and debts are handled in case of divorce. It helps prevent disputes by ensuring both partners agree on financial matters from the start.

Couples may choose a prenup to clarify financial responsibilities, protect wealth, manage debt, safeguard dependents or set terms for business ownership. It can also address pet care and inheritance rights. Key areas covered in a prenup include:

• Alimony: Defines spousal support, including minimum payments if separated.
• Property: Establishes ownership and responsibility for primary and vacation homes.
• Dependents: Secures financial care for children, previous dependents, and inheritance rights.
• Life insurance: Determines beneficiaries and life insurance policy distribution after death.

Prenup laws vary by state — 28 states follow the 1983 Uniform Premarital Agreement Act, while others have unique regulations. A family law attorney can help you determine which laws apply in your state.

How to protect yourself financially in a divorce

You must do what you can to protect your finances during a divorce. First, collect your bills, bank and credit card statements, and any debt or loan information so you can organize your income and expenses for your court case.

Opening a new checking account and preparing a post-divorce budget to help you manage your money are the first steps in financially moving toward. Additional tips:

• Appoint beneficiaries: Check to make sure the correct beneficiaries are in place for things like your pension or retirement fund. Spouses are often named beneficiaries of their partners’ policies, so you must change this if you now prefer another party.
• Save your money: Divorce can present new financial challenges as former spouses adapt to a single-income household. Avoid any large purchases or major financial decisions until you hear the court’s final decision on the division of debt and assets from the marriage.
• Work on your credit: Get a copy of your credit report so you know where you stand. You may want to get a new home mortgage or car loan, and it will be easier to get one when you have good credit. It also helps ensure that you are not being penalized for debts you already paid or that do not belong to you in the first place.

Keep in mind that it is best to consult a divorce attorney who understands your state’s laws. They can guide you through the process, making a tough time a little easier. A mediator and financial planner can also help round out a supportive team of professionals to help you get through a divorce.

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Bottom line

Community property states generally consider debt to be the responsibility of both spouses. However, that is different in equitable distribution states. When dealing with debt, courts generally consider who is the debtor and whether the debt benefitted the household. At the end of the day, the responsibility of debt in equitable distribution states depends on your specific case and the judge overseeing it.