Debt and Divorce Overview
When you divorce, you’ll need to divide your debts as well as your assets. Here’s an overview of how to handle marital debts. When you divorce, you’ll need to divide your debts as well as your assets. Just like your assets, your debts will also be classified as marital (community) or separate. Generally speaking, each spouse is responsible for paying off any individually-incurred debt created prior to the marriage; these are separate debts. However, debts incurred jointly during the marriage are the responsibility of both spouses – regardless of who actually spent the money. Joint o...
USA Property Division: Community Property vs. Equitable Distribution
There are two ways to treat property division in the US, and it depends on which state you live in. If you reside in a US state, and you and your spouse can’t agree on how to divide jointly-owned property, then the courts will divide it for you according to “equitable distribution” or “community property” principles. (By the way, your joint debts will also be divided according to either equitable distribution or community property principles.) Although the specific details vary from state to state, the main difference between the two schemes is that in community property states, t...
Marital Property vs. Separate Property in Divorce
Here’s an explanation of how the courts typically define separate property and marital property in divorce. In a divorce, all assets are designated as either separate or marital (known as “community” in some states) property in accordance to the state or provincial laws and prenuptial or marital agreements (if any). All marital property will go into the marital pot to be divided between the spouses, and each spouse gets to keep his/her own separate property (assuming it has been kept separate for the entire marriage). Exactly what constitutes separate vs. marital property can be a gra...