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How debts are handled during a divorce

On Behalf of | Apr 13, 2021 | Divorce

The state of Washington is a community property state, which means that joint assets are divided equally in a divorce settlement. It also means that joint debts are typically split equally in a divorce settlement. An outstanding balance may be labeled as a marital debt even if your name doesn’t appear on the loan documents.

When was the debt acquired?

It’s important to note that a debt is unlikely to be considered a communal obligation unless it is acquired during the marriage. For example, if your spouse borrows money to buy a car while you’re married, that loan balance is typically a joint debt. However, if your spouse brought a car loan into the marriage, you wouldn’t be liable for paying any portion of it after the union came to an end.

Was the debt associated with an inheritance?

A debt related to an asset that was received as part of an inheritance may be considered separate property. For instance, if your spouse was gifted a home by his or her parents, that item would typically be labeled as a separate asset. If there was a mortgage associated with that property, the outstanding balance might be thought of as a separate debt.

Do you have a prenuptial agreement?

Prenuptial agreements allow couples to essentially override state property division laws. This type of document can be used to stipulate that whoever accumulates a debt during the marriage is responsible for paying it off after the divorce decree becomes official. It may also be used to stipulate that one spouse is responsible for paying a set percentage of marital debts regardless of how they were acquired.

If you are thinking about ending your marriage, it may be worthwhile to speak with an attorney. He or she may be able to talk more about how debts could be divided in your case. Your attorney may also be able to review a prenuptial agreement to determine if it can be enforced in court.