By Tracy Achen 

At first glance, dividing debts in divorce seems pretty straight forward for most people. After all, it’s usually standard procedure to assign certain debts to each spouse as part of the divorce decree. If a couple can’t reach a mutual agreement when dividing the marital estate, there are a two main factors a court considers when dividing the debts:

• Is the debt a marital debt or the separate debt of just one spouse? 
• Does the couple live in a community property or equitable distribution state? 

We will discuss each of these topics, as well as other things to consider and how to protect yourself when dividing debts below. 

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Dividing Debt in Divorce – Marital vs. Separate Debt

The first thing to consider when dividing the marital estate is determining whether the debt is a marital or separate debt.

Marital debt is any debt that was incurred during the marriage, regardless of whose name is on the debt. A mortgage for the family home purchased during the marriage is an example of a marital debt, even if the mortgage is only in one spouse’s name. Other things that could be considered marital debt are car loans, bank loans, and credit card debts that were incurred during the marriage.

Separate debt is any debt incurred before the marriage or after a legal separation. For example, a student loan that was taken out before the marriage would generally be considered the separate debt of the person who took out the loan, unless it was refinanced during the marriage.

This brings up an important point on how separate debt can be transmuted into marital debt. When a pre-marital debt is refinanced during the marriage using joint funds to pay off the loan, it would then be considered a marital debt.

How a court divides debt depends on where you live. There are nine community property states: AZ, CA, ID, LA, NV, NM, TX, WA, and WI. In community property states, generally all debts incurred during the marriage are considered marital debts. As such, the court will divide the debts equally between the spouses, regardless of who acquired the debt.

The rest of the states are equitable distribution states. In these states, marital assets and debts are divided in an equitable manner. This doesn’t mean the court will split the debts equally, rather the court will determine a division of debt that is the most fair and even. Some things the court will take into consideration in making this determination are:

• who incurred the debt  
• the nature of the debt 
• if both parties benefited from the debt 
• the earning capabilities of each spouse 

If a debt was incurred solely by one spouse and the other spouse did not benefit from the purchase, this debt sill likely be deemed a separate debt and not divided between the spouses. For example, a spouse who runs up credit card debt facilitating an illicit affair will generally be responsible for the debt in a divorce.

Debt Liability in Community Property States

As if being liable for joint debts wasn’t bad enough, you also need to be aware of how debt responsibility for individual accounts is handled in different states. In community property states, both spouses may be held liable for all debts incurred during their marriage. Which means the creditors can hold you responsible for repayment of your spouse’s debt, even if you were unaware of the debt.

If you live in a community property state, it is vitally important to have full financial disclosure before you start negotiating your divorce settlement. This involves having a detailed listing of all debts, including account numbers, names on the accounts, and amounts owed on each account. You can start gathering this information by looking at credit card statements and loan documents. It’s also a good idea to order a copy of your credit report to determine if there are any debts you weren’t aware of.

Here is a really good video discussing assessing debt responsibility in divorce:

Creditors Aren’t Bound by Divorce Decrees

Many divorced people have learned the hard way that a divorce decree doesn’t change the contracts they made when they were married. If you jointly acquired a debt with your spouse, both of you are equally responsible for repaying the loan, regardless of what your divorce decree says. Basically, agreements between you and your husband will have no effect on any agreements made with creditors.

Adding an Indemnity Clause to Your Divorce

If your spouse will be responsible for a debt after the divorce, you need to be sure to add an indemnity clause to your settlement agreement. Worded properly, this will give you grounds to take your ex back to court to be compensated for any money you have to pay as a result of his defaulting on a loan. An indemnity clause will also give you means to have the debt removed from your credit report. You should discuss this matter with your lawyer, especially before you sign the final divorce papers. 

Protecting Your Interests on Secured Loans

No matter which state you live in, don’t allow your name to be taken off property deeds or vehicle titles if your name is still on the loan securing that asset. If your spouse will be keeping the home or vehicle, you need to make certain that the loan is refinanced in his name only. In fact, you should add a clause in your divorce agreement requiring the loan to be refinanced.

Unfortunately, what often happens is that one spouse keeps the house and the other signs the quitclaim deed, but the mortgage is never refinanced. If the mortgage goes into default later on, the innocent spouse is held equally responsible for the debt, but has no claim to the actual house.

The lesson here is that you shouldn’t remove your name from any deed or title if your name is on the loan. There is nothing worse than having to pay for something you no longer own. 

To find out more about the different aspects of dividing debt in divorce and get tips on how to protect your credit, keep reading: 

Updated September 15, 2025