If you’re reading this article, then you’re probably looking for information on how to navigate debt before or after a divorce.
I’m sure there are a lot of questions going through your head right now.
You may be wondering what happens to your debt after you get a divorce. You may even be wondering if there’s a way to protect yourself from your husband’s debt after your divorce.
Many of my readers are stay-at-home moms who have navigated divorce and needed some answers to their questions.
Here are some articles related to divorce that you may find useful.
13 Ways To Get Out of Debt After Divorce According To Experts
21 + Ways To Start Over After A Divorce With No Money
How Can A Stay-at-Home Mom Afford A Divorce? Experts Answer Your Divorce Questions
How To Afford To Live On Your Own After A Divorce – 17 Helpful Tips
To make sure I provide you with the most helpful information out there, I’ve consulted with some experts in the field to get their opinions.
Quick disclaimer: The information provided in this blog post is not legal advice. It’s for informational purposes only. Please consult a lawyer in your state for legal advice if you need it.
Below are some of the most frequently asked questions regarding divorce and debt.
What happens to my debt when I get a divorce?
If you live in a community property state, both you and your spouse are responsible for your debt after you get divorced. In a common law property state, creditors can go after you or your spouse’s property or income if the debt was used to make purchases for family necessities (source).
In general, the debt you incurred before marriage is yours. The debt you incurred jointly with your spouse during the marriage will be the responsibility of both of you.
I spoke with Erin Levine, a lawyer, and founder of the site Hello Divorce. She said that the credit card debt you acquired during the marriage is split between you and your spouse.
Even if you live in a community property state, it may be best to take your debt instead of splitting it to avoid it ruining your credit.
Ms. Levine, J.D. states “I generally advise that the person who is the primary account holder take the debt so that they are not constantly worried about their spouse failing to make a payment and it ruining their credit.”
If your spouse refuses to pay their share and the debt is in your name, your credit will be the one that’s ruined. It may not be worth the hassle of chasing them down to get them to make a payment.
Ms. Levine, J.D., also said “If you take on the credit card debt, make sure to offset it with another asset or debt so that you aren’t getting stuck with all the debt”.
This means that if you’re going to take on a debt, then make sure you’re also claiming an asset as well so that you’ll have enough money to pay the debt you claimed. It’ll also make things fair if your spouse also claims full responsibility for another debt as well.
As for student loan debt, here’s what Erin Levine, J.D. had to say.
“Student loans are treated differently depending on the state you live in and the purpose of the loan. So, for example, if the loan was used to pay marital expenses like rent and food during their marriage, it is more likely that a couple will agree (or a court will order) that some part of that loan be shared.
If the student loan was used primarily for educational purposes and the marriage is fairly short, most likely it will be assigned to the spouse who incurred it (even in 50/50 community property states)”.
Does a wife have to pay her husband’s debt after a divorce?
A wife might have to pay some of her husband’s debt If the debt in question was incurred during the marriage. Debt like a mortgage, car loans, and any others that both spouses incurred together is usually considered the responsibility of both spouses because they both benefited from it.
Kristyn Carmichael a certified divorce financial analyst had this to say “The general view of the law is that a marriage is a joint, financial venture. This means that although you didn’t take out the debt and your spouse did, you may still be responsible for it depending on the situation”.
If you think you’ll be in debt after your divorce, there are things you can do to help your situation.
Talk to your lawyer about getting spousal support.
Spousal support (also called spousal maintenance or alimony) is the payment that the spouse who makes more money pays to the one who makes less money for a duration of time.
How much you’ll receive in spousal support and for how long depends on the laws of your state. To read more on some criteria a judge may look for when allocating alimony, check out this article.
Ms. Carmichael, a divorce financial analyst states that when discussing spousal support you should look at what monthly debt payments you will have to pay off, on the debt you will be responsible for after the divorce.
When reviewing your budget, you should consider not only your average expenses, such as housing, food, clothing, vehicle, etc but also the impact the debt will have on your monthly bills.
How can I protect myself from my husband’s debt before a divorce?
There are two ways to protect yourself from your husband’s debt before a divorce. These include a prenuptial agreement and a postnuptial agreement. A prenuptial agreement (prenup) is a contract that you and your spouse agree on before marriage. A postnuptial agreement acts just like a prenup, but it’s a contract you get into after marriage.
If your husband came into the marriage with a lot of debt, your prenup or postnuptial agreement could establish that their debt will remain theirs if you get divorced (source)
Family Law Attorney, Sabrina Shaheen Cronin says when it comes to divorce, prenuptial agreements can help with the following:
A Prenup can help distinguish between separate property and marital property
In the prenup, the two parties can define what property will be considered marital and what property will be considered separate, regardless of when that particular item or thing was purchased or acquired.
They do not have to rely on their state’s laws for that definition.
A Prenup can help protect against debts
A prenup can protect the non-debtor party from having to pay for the debts of another. Also, creditors can try to collect from marital property, even though there is only one debtor.
So, to protect and limit exposure to potential debt and liability, ensure your attorney drafts a valid and binding prenup.
A Prenup can Protect family property, businesses, and inheritance
A prenup can specify any type of item, heirloom, business, or asset, whether present or in the future, to remain separate property. Which means it won’t be subject to any division during a divorce. This can also apply to personal and real property.
Referencing your Estate Plan
It is crucial that both documents, the prenup and estate plan, support the other.
Let’s examine this scenario as an example. if you are trying to ensure your children from a previous relationship inherit your personal or real property, not only should your trust speak to that, but your prenup should discuss your intention as well.
Staying married or getting a divorce will not affect your wishes that your children (not your husband) be the ones to inherit your property as long as your prenup clearly states your estate plans.
If you decide to draft your prenup with different terms from your already prepared trust, for example, make sure you change your trust to reflect the new terms.
Can I empty my bank account before a divorce?
I asked Derek Jacques, J.D. a divorce lawyer this question, and here’s what he said
“You can definitely empty a bank account prior to a divorce, as long as it is your personal account. If it is a joint account, then you could be penalized by the court. It is best to maintain a separate account of your funds rather than empty a jointly held bank account”.
There are three major reasons why it’s not advisable to empty a joint bank account before a divorce.
Jean Pierce, Founder of Divorce Help For Parents explains them below.
Firstly, if you attempt to hide or dissipate assets during a divorce, it could be seen as an act of fraud or deceit by the court.
This could result in penalties and sanctions, including fines or even jail time, and may harm your credibility and standing in the eyes of the court.
Secondly, it’s important to note that in many states, the assets you and your spouse acquire during the marriage are considered marital property, which is subject to equitable distribution during a divorce.
This means that even if you emptied your bank account before the divorce, the court could still view that money as marital property and divide it between you and your spouse.
Finally, emptying your bank account before a divorce can also negatively impact your finances and credit score. If you have no money left to pay your bills, you may fall behind on payments, which can damage your credit score and result in additional fees and penalties.
Who pays the divorce bills when going through a divorce?
Typically each individual involved in the divorce pays their own bills and lawyer fees. In a circumstance where one spouse is unable to pay, they can seek the help of the court to get the other spouse to pay their divorce bills.
According to Vicki Shemin, a Massachusetts-based lawyer, “Your attorney can file a document called a “Motion for Attorney’s Fees Pendente Lite.
This filing allows for the Judge to provide an interim award of fees in order to “level the playing field” of access to justice. This ensures that you will have money to get a good lawyer to fight for your divorce.
Final Thoughts On Divorce and Debt
Getting a divorce is a scary process. From the moment you make the decision to the moment it’s finalized, there will always be questions going through your mind.
I hope that I was able to answer some of your questions today concerning how divorce will affect your debt. Feel free to leave a comment below if you have money divorce questions.