When a marriage ends, dividing finances isn’t just about assets—it’s also about debts. Shared obligations, like a car loan or a credit card balance, don’t simply disappear when you separate. Instead, they remain a part of the financial picture that needs resolution. Knowing how these debts will be divided is key to protecting your financial well-being. Whether the debts were taken on together or individually during the marriage, understanding your rights and responsibilities can set the stage for a more secure future.
What Are Shared Debts?
Shared debts are financial obligations that both spouses are responsible for repaying. These typically arise from jointly held accounts, such as a mortgage, car loan, or credit card opened in both names. Unlike personal debts, shared debts are taken on for mutual benefit, like purchasing a home or funding household expenses. Even if the divorce court divides responsibility for repayment, creditors can still pursue either party. This means shared debts remain a joint responsibility until paid off or refinanced. Reviewing and addressing shared debts early in the divorce process can help prevent unexpected financial issues down the road.
Understanding Marital Debts
Marital debts include financial obligations incurred during the marriage, regardless of which spouse’s name is on the account. In Massachusetts, these debts are typically divided based on equitable distribution, focusing on fairness rather than splitting them equally. Examples of marital debts include:
- Credit card balances used for household or shared expenses.
- Loans taken out during the marriage, such as personal or business loans.
- Auto loans for vehicles used by either or both spouses.
It’s important to note that even if a debt is in one spouse’s name, it can still be considered marital if it benefitted the household.
Debts Acquired Before Marriage or After Separation
Debts acquired before marriage are usually considered separate, meaning the spouse who incurred them remains solely responsible. Examples include student loans or credit card balances that existed before the wedding. However, if a debt is co-signed or used for joint purposes, it may be treated differently.
Debts incurred after separation can be more complicated. Generally, these debts are separate, but exceptions may apply if they directly benefit the marital estate, such as maintaining a shared home or covering joint expenses. To protect your financial interests, it’s important to carefully document the purpose and timing of any debts during this period.
How Debt Division Works in Massachusetts
In Massachusetts, dividing debts in a divorce follows the principle of equitable distribution. This means the court focuses on fairness rather than an equal 50/50 split. Judges consider several factors when deciding how to allocate debts, including:
- Purpose of the debt: Was it for joint household expenses or personal use?
- Each spouse’s income and assets: Can one spouse more easily absorb the debt?
- Contribution to the debt: Who incurred or benefited from the debt?
It’s also important to note that creditors are not bound by divorce agreements. If both names are on a loan or credit account, they can pursue either spouse for repayment, regardless of the court’s decision. Refinancing or closing joint accounts can help prevent future financial complications.
Protecting Yourself from Debt Issues After Divorce
Taking steps to manage debt during and after divorce can help you avoid future financial problems. Consider the following:
- Review joint accounts: Identify all shared debts and accounts to ensure nothing is overlooked.
- Close joint credit accounts: Prevent additional charges by closing or freezing shared accounts.
- Refinance loans: Transfer joint debts into individual accounts where possible.
- Document agreements: Keep detailed records of how debts are divided to protect yourself.
Additionally, monitor your credit report to ensure debts assigned to your ex-spouse are being paid. These proactive measures can safeguard your financial stability as you move forward.
Contact Our Experienced Middlesex County Divorce Attorneys
Managing debt during divorce is critical to securing your financial future. By understanding your rights and taking proactive steps, you can move forward with confidence. Let us help you address your concerns and protect your interests. Contact LaFountain & Wollman, P.C. today to schedule a consultation and discuss your options.