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Dividing debt in a divorce

On Behalf of | Mar 15, 2022 | Divorce, Property Division

When two spouses file for divorce, asset distribution becomes a prominent aspect of negotiations. While divorcing Washington spouses may be wise to focus on property division and child or spousal support, neither party can take their eyes away from any accumulated debt. Someone has to pay outstanding obligations, and the divorce proceedings might determine who does.

Debt and divorce

Washington is a community property state, meaning debt is commonly split 50-50. Under community property laws, even if one spouse runs up debt on a credit card, the other spouse may owe 50% of the obligations. Debt is part of the “community relationship” between both spouses.

Divorcing spouses should understand that debt accumulated by someone before the marriage won’t carry over into the marriage. The debt isn’t community property because the couple wasn’t married at the time one party incurred it.

Focusing on debt during the divorce

Other circumstances may factor into debt distribution during divorce. For example, one spouse might become involved with fraudulent or criminal activities, leading to debts unknown to the other spouse. An innocent spouse could explore options that might free them from the obligations.

As for tax debts, the IRS has policies and rules in place for innocent and injured spouses. Seeking such remedies may result in the IRS ruling favoring the spouse seeking relief. The process could take time, depending on the agency’s workload, though.

Prenuptial or post-nuptial agreements could have an impact on how debts and assets in a divorce. The agreement might establish how the parties divide debts, leaving one spouse with a larger amount of obligations. However, such agreements must be valid under state law to be enforced.