Financial struggles frequently contribute to problems between spouses. In some situations, the challenges become so great that they ultimately contribute to the irrevocable breakdown of the marriage.
When divorcing, spouses must figure out how to address their shared debt just like they must agree on how they will split their joint assets.
Debt responsibility and account names
Many couples open credit card accounts or take out vehicle loans or mortgages and put both persons’ names on the accounts. During divorce negotiations, the couple may agree on which person shall repay which debts after their divorce. These agreements may be laid out in their divorce decree. However, Bankrate explains that if both of their names remain on the accounts, the creditors may still consider both people financially responsible for the debt. Any missed or late payments may be reflected on both spouse’s credit reports.
Some couples agree that a spouse assuming responsibility for a joint debt after their divorce must transfer that debt into a new account in their name only. Other couples find ways to pay off all shared debt prior to getting divorce or as part of their divorce process.
Student loan debt and divorce
Student loans may be deemed joint debt in some situations. According to Student Loan Hero, the use of the money may contribute to this. For example, if a person takes out a student loan and uses that money to pay rent or a mortgage for a home shared with their spouse, the courts may consider the debt to be shared, not the separate debt of the person who took the loan out.