Often when people divorce they are concerned with how much of the partnership's assets they will each receive. They are rarely as excited about the amount of shared debt they will acquire, though how debt is divided is an important divorce issue. Couples in Massachusetts should be aware of the situations that may impact just how much debt each former spouse will be liable to acquire.
How particular debts are divided may depend on a number of factors. For example, credit card debt distribution will be impacted by which individual signed for the card if the card is issued to both spouses, or will be different if a card is only issued to one of the spouses. Financial experts note that even if a credit card is issued to one of the spouse's, if that spouse defaults on the credit card debt the creditor may seek repayment of the debt from shared spousal assets. To that end, a personal credit card held by one spouse may become a liability for shared marital assets.
Individuals going through divorces should review the contracts and other financial documents that they signed when opening bank accounts, investment accounts, credit cards and other financial accounts. These documents can provide valuable guidance on how a particular account is structured and with regard to how its contained assets or debts may be divided in a divorce proceeding.
Although Massachusetts courts equitably distribute marital assets and debts among divorcing spouses based upon many factors that ultimately may not leave the final distribution exactly equal, individual spousal debts can still become marital liabilities. Issues related to marital asset and debt distribution are complicated and should be handled with care to prevent future disputes over property divisions.
Source: Fox Business, "Will my Husband's Business Card Debt Hurt my Credit After Divorce?" Elaine Pofeldt, April 25, 2013