When a couple is preparing to end a marriage, one of the primary areas of focus is the division of marital wealth. Many Pennsylvania spouses spend a great deal of time and effort considering which assets to pursue within the property division portion of their divorce but give very little attention to matters of debt. When it comes to the division of finances, both assets and debt are included. Understanding which debts will be included within that process is important for spouses who are concerned about their post-divorce finances.
When it comes to debt held within a marriage, the law looks at when the debt was taken on. Debt acquired before the date of marriage is usually considered to be separate from marital debt, which is considered as all debt that is accumulated after the date of marriage but before the time of separation. Examples of separate debt would be credit card balances that were in existence at the time of marriage. Student loan debt acquired before the marriage is another example of separate debt and will likely be retained by the spouse who took out those loans.
When it comes to debt acquired during the course of the marriage, the law considers those obligations to be marital debt. This is true even in cases where one spouse was unaware that the debt was being taken on, or when the items purchased were for the benefit of only one spouse. In some cases, an exception is made when the debt was acquired during the course of an extramarital affair. Mortgages and auto loans that were initiated during the marriage are also considered to be marital debt.
Spouses who are preparing to divorce should make it a priority to assess the full range of all debt, regardless of whether it is held by one or both parties. Having this information can help a Pennsylvania spouse to make an informed estimation of how debt will be handled during property division. That, in turn, allows one to create a post-divorce budget that can support financial stability in the months and years following the end of the marriage.
Source: TIME, “What Happens to My Debt If I Get a Divorce?“, Leslie Tayne, June 23, 2015