Understanding Debt Division in Divorce
- Lisa McNally
- Aug 20, 2025
- 3 min read
Divorce is never just about emotions—it's also about untangling a life built together. And one of the most misunderstood and stressful parts of that process is figuring out who is responsible for what when it comes to debt division. Whether you’re facing credit card balances, a joint mortgage, business loans, or tax debt, understanding your rights and obligations is crucial to securing your financial future.
At Optimal Divorce Solutions, I guide clients across the country through the financial intricacies of divorce. As a Certified Divorce Financial Analyst (CDFA®), Certified Divorce Mediator, and Divorce Coach, I help my clients understand their options, advocate for themselves, and walk away with a clear, informed financial path forward.
What Is Debt Division in Divorce?
When a couple divorces, all marital property must be divided, and that includes marital debt. This process involves identifying, classifying, valuing, and distributing both assets and liabilities.
Marital vs. Separate Debt
Marital Debt: Debt acquired during the marriage, regardless of whose name it's in.
Separate Debt: Debt incurred before the marriage or after separation, or debt that can be proven to solely benefit one party.
Each state has different rules about how debt is divided. Most follow either equitable distribution or community property principles:
Equitable Distribution States (like New Hampshire and Maine): Debt is divided fairly, though not always equally.
Community Property States: Debt acquired during the marriage is typically split 50/50.
Always consult a financial expert or attorney familiar with your state's laws.
Common Types of Debt in Divorce
1. Credit Card Debt
Credit card balances are often the trickiest. If the card is in one spouse's name but was used for family expenses, it may still be considered marital.
2. Mortgage Debt
Whether you're keeping the house, selling it, or refinancing, your mortgage must be addressed. As a Certified Divorce Real Estate Expert (CDRE) and Licensed Real Estate Broker, I help clients navigate these decisions.
3. Auto Loans
If a vehicle is awarded to one spouse, that person usually assumes the loan—but both names may still remain on the account unless refinanced.
4. Business Loans
When a business is jointly owned, the division of debt must consider ownership interests, income potential, and business valuation.
5. Tax Debt
Owed taxes can be a shared burden or assigned to one party depending on when they accrued and why.
6. Student Loans
Student loans are sometimes treated as separate debt, but if marital funds were used to pay them or if they benefited the family (e.g., increasing income), they may be divided.
How to Protect Yourself
Pull Your Credit Report
Before negotiating anything, review your full credit report from all three bureaus. This ensures you’re aware of every account that might affect your future.
Separate Joint Accounts
Where possible, close or separate joint credit cards and loans. Keep records of all communications and payments.
Use a CDFA®
A Certified Divorce Financial Analyst can:
Identify risks in proposed debt settlements
Model long-term impact of division scenarios
Recommend negotiation strategies
Learn more about my CDFA services HERE
Don’t Assume the Court Will Protect You
If your spouse agrees to pay off a debt but defaults, creditors can still come after you if your name is on the account. Consider requiring refinancing or selling the asset to fully release yourself.
Consider Mediation
As a Certified Divorce Mediator, I help couples find fair and respectful debt resolutions without court battles. Mediation allows for more creative solutions and financial clarity.
Explore divorce mediation services HERE
FAQs About Divorce and Debt
What if my spouse ran up debt I didn’t know about?
You may not be liable for secret or wasteful spending. This can often be addressed during settlement negotiations or in court.
Can I remove my name from a joint debt?
Only the creditor can do that, usually through refinancing or payoff. Divorce agreements alone won’t remove liability.
What if I can’t afford to pay my share?
It’s essential to disclose your financial limits during negotiations. I help clients structure settlements that consider cash flow and future stability.
Key Takeaways
Marital debt includes most debts incurred during the marriage.
Debt is divided differently in equitable distribution vs. community property states.
Refinancing or selling is often necessary to release liability.
Working with a CDFA® can uncover hidden risks and improve financial outcomes.
Mediation can help couples resolve debt fairly and respectfully.
Even when it feels overwhelming, you have options. With the right guidance, you can navigate debt division confidently and protect your future. Let me help you find clarity, avoid costly mistakes, and make informed choices.
Lisa McNally
Certified Divorce Coach | Certified Divorce Mediator
Certified Divorce Financial Analyst (CDFA®) | Certified Divorce Real Estate Expert (CDRE)
Licensed Real Estate Broker (NH & ME)
Founder, Optimal Divorce Solutions
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