During a divorce, debt is divided by the Court in a “just and equitable” manner. If one party is using a credit card to pay household items and the other spouse’s name is not on the credit card, it does not mean that the Court cannot hold both parties responsible when it comes to analyzing the assignment of debt. Such a debt owed to a credit card company would likely be treated as marital debt. The Court reserves the authority and the power to allocate debt in an unequal manner since the assignment of debt has to be “just and equitable” (e.g. if one spouse is financially more able to afford the debt, the Court can assign more of the debt to that party).
During the Divorce, and sometimes even prior to the Divorce proceedings commencing, it is a good idea to obtain a written credit report to make sure that the debt on your credit report will be accounted for in the Divorce Decree. A spouse can also request and obtain the written credit report of the other spouse (e.g. during the Discovery process) so that all debt can be addressed in the Divorce proceeding.
An award of property and assignment of debt can be offset against each other. In other words, a party can be assigned an unequal amount of debt, provided that he or she is also awarded an unequal amount of assets to equalize the final property award.
Relative to marital debt, it is also important to know that although the Court has the ability to assign debt justly and equitably (notwithstanding whose name the debt is under), the creditor will still be able to and has the power to pursue the party named on the debt. As such, it is extremely important to get good legal advice and a solid strategic plan to deal with debt.
