How is debt divided during a divorce?
Debts assumed during the marriage will need to be considered during the final division of the estate in a divorce. There is technically no such things as “community debt” because the debt is linked to the individual parties, rather than the community estate; however, the community estate is responsible for paying most debts assumed during the marriage. The court will analyze the estate as a whole to reach an ultimate division of the community estate that is fair to both parties. That means that if one party receives more value from the assets, that party is likely to be ordered to assume more debt to balance out the advantage. Because every community estate is different, this analysis varies greatly in each case. Something else to keep in mind when considering the division of debt is what will happen if the party ordered to pay the debt fails to do so. A divorce decree does not override a creditor’s right to collect on a debt or affect a debt-holder’s credit score, so many people prefer to keep the debt in their name to ensure that it is actually paid and their credit score is not negatively affected.