Understanding Divorce Debt

Divorce debt refers to the money owed by one or both spouses at the time a marriage ends. This can include debts built up during the marriage, as well as existing balances that become harder to manage once households split. Understanding how different debts are viewed and divided can help clarify what financial responsibilities may remain after the divorce is finalized.

What Counts as Marital Debt vs. Individual Debt 

In general, debt may be categorized as either marital or individual based on factors such as when it was incurred and how the funds were used: 

• Marital debt often includes debts incurred during the marriage, particularly if they benefited the household. Examples may include a mortgage, joint credit card balances, or auto loans used by the family. 
• Individual debt typically refers to debts one spouse brought into the marriage or debts that primarily benefited only one person—such as personal spending or a business loan for a separate venture. 

Even if a credit card is in one spouse’s name, it might still be considered marital debt if it was used for shared household expenses, like groceries, childcare, or utilities. Because of this, records showing how the debt was used can play an important role in divorce proceedings. 

Note: Debt classification can vary depending on state laws. For specific guidance, it’s best to consult with a qualified attorney familiar with family law in your jurisdiction. 

Common Types of Debt Involved in Divorce 

Debt comes in many forms, and most couples juggle a mix of the following: 

• Credit cards: These are often jointly held or used for shared purchases, making them one of the trickiest to divide. 
• Mortgages: If both names are on the home loan, both partners remain legally responsible until it’s refinanced, sold, or otherwise settled. 
• Auto loans: Even if only one spouse drives the car, the name(s) on the loan determine who’s on the hook for payments. 
• Personal loans: Loans used for vacations, weddings, or other joint experiences can become a point of contention. 
• Taxes: Any back taxes owed—especially from joint returns—can follow both partners after divorce. 

How the Costs of Divorce Can Lead to Debt 

Even if you enter the divorce process debt-free, the process itself can create new financial burdens. Here are a few common expenses that push people into debt during and after divorce: 

• Legal fees: Attorneys, court filings, mediation, and custody-related services can cost thousands. 
•  Housing and relocation costs: Finding and furnishing a new home often requires a security deposit, first month’s rent or mortgage, movers, and new household essentials. 
• Child-related expenses: These can increase significantly after divorce and may include daycare, extracurriculars, healthcare not covered by insurance, and costs for transporting children between households. 
• Loss of income or financial stability: Going from a two-income household to one can stretch a budget thin.  

How Debt Is Divided During a Divorce

One of the most complicated parts of a divorce is figuring out who is responsible for what. Whether you’re dealing with shared credit cards, a mortgage, or personal loans, understanding how debt is divided during divorce can help you prepare and protect yourself. 

Joint Debt vs. Separate Debt 

The first thing to determine is whether a debt is considered joint or separate. 

What Is Joint Debt? 

Joint debt is any debt that both spouses are legally responsible for. This can happen when: 

• Both names are on the loan or credit card account 
• One spouse co-signed a loan for the other 
• A debt was incurred during the marriage for the benefit of both partners or the household 

Examples of joint debt include: 

• A mortgage or car loan with both names on the contract 
• A credit card used by both spouses for family expenses (even if it’s under just one name) 
• Medical bills from a family emergency during the marriage 

Legal Note: In many states, any debt acquired during the marriage—even if only one spouse signed for it—may still be treated as joint debt if it served the household. 

What Is Separate Debt? 

Separate debt typically refers to debt that: 

• Was taken on before the marriage 
• Was used for individual purposes 
• Is in only one spouse’s name and did not benefit the household 

Examples of separate debt include: 

• A student loan one spouse took out before getting married 
• A credit card used for personal spending not related to the family 
• A business loan for a sole proprietorship with no joint involvement 

Why These Distinctions Matter 

The court will use the distinction between joint and separate debt to decide who is responsible for repaying which debts after the divorce. However, creditors don’t care what your divorce decree says—they care whose name is on the account. 

Even if the court orders your ex to pay off a joint credit card, the lender can still come after you if your name is on it and payments stop. The divorce agreement may give you grounds to seek reimbursement or enforcement, but it doesn’t remove your legal obligation in the eyes of creditors. 

How State Laws Affect Debt Division 

Debt division in divorce often depends on the laws of the state where you live. Generally, states follow one of two legal approaches to dividing property and debt: community property or equitable distribution. 

Community Property States 

In community property states, assets and debts acquired during the marriage are typically treated as jointly owned—regardless of whose name is on the account or loan. 

This often means that: 

• Debts taken on during the marriage may be considered equally shared. 
• Both spouses may be held responsible for marital debts. 
• Creditors might be allowed to pursue either spouse for repayment of joint debts. 

Equitable Distribution States 

In equitable distribution states, courts aim to divide marital debt in a way that is fair, which isn’t always a 50/50 split. Judges may evaluate various factors when deciding how to divide debt obligations. 

Factors that might be considered include: 

• Each spouse’s financial situation and ability to repay 
• The purpose of the debt and who incurred it 
• Whether the debt benefited both spouses or was personal 
• Who retains the asset associated with the debt (such as a home or car) 
• Evidence of misuse or concealment of marital funds 

The Role of Prenuptial and Postnuptial Agreements 

If you and your spouse signed a prenuptial or postnuptial agreement, that document may outline how debts will be divided in the event of divorce. These agreements can: 

• Protect one spouse from the other’s pre-existing debts 
• Define which types of debt will remain separate during marriage 
• Determine how new debts will be split if divorce occurs 

While not every couple has one, these agreements can greatly reduce uncertainty and conflict during the separation process. 

Common Divorce-Related Debt Challenges

Even with a divorce agreement in place, debt can cause complications long after the papers are signed. From debts incurred during separation to the financial fallout of a former spouse’s missed payments, these common challenges often catch people off guard. 

Debt Incurred During Separation 

Just because you’re separated doesn’t mean your finances are fully split. In many cases, debts incurred after separation but before the divorce is finalized may still be considered marital debt. 

Paying Off Shared Debt While Separated 

During separation, many couples continue to hold joint debt such as credit cards, car loans, or mortgages.  

This can create major challenges. For example: 

• One person may stop contributing, leaving the other to shoulder the full burden. 
• Late payments can damage both credit scores—even if you had nothing to do with the missed bill. 
• Emotional stress and resentment can grow when financial cooperation breaks down. 

To manage this, you can: 

• Agree on who will pay what during the separation period and get it in writing 
• Continue to monitor joint accounts for activity and due dates 
• If possible, make minimum payments to protect your credit—even if your ex is supposed to contribute later 

One Spouse Defaulting on Shared Debt Post-Divorce 

One of the most common post-divorce financial headaches is when your ex stops paying the debt they were assigned. Even if the divorce decree says your ex is responsible for a joint credit card or loan, lenders might still pursue both parties for repayment. 

Protecting Your Finances During Divorce

Divorce can leave your finances vulnerable. Fortunately, there are steps you can take to safeguard your financial future as you move through the divorce process. 

Untangle Shared Accounts and Credit 

Joint accounts, co-signed loans, and shared lines of credit create ongoing financial ties that can cause serious issues if not addressed. 

You can start by: 

• Making a list of every joint account, loan, and subscription tied to shared credit cards 
• losing or freezing joint credit card accounts (with both spouses’ agreement, if possible) 
• Removing your name from shared utility bills, phone plans, or subscriptions 
• Opening new individual accounts for banking, credit, and savings 

Note that removing your name from a credit card does not remove your responsibility for the debt. You may want to work with the lender to officially close or transfer the account if possible. 

Monitor Your Credit Report Throughout the Process 

Keeping an eye on your credit report can help you catch unauthorized activity or errors before they damage your financial reputation. To do this, you can: 

1. Pull your credit reports from Equifax, Experian, and TransUnion at the beginning of the divorce process. 
2. Review them for joint accounts, unfamiliar balances, or collections you weren’t aware of. 
3. Continue checking your credit at least once per quarter until all joint accounts are closed or reassigned. 

Work With a Divorce Financial Professional 

Dividing debt and assets fairly can get complicated fast. A financial professional who specializes in divorce can help you create a clear plan, avoid tax pitfalls, and make more informed decisions. 

Types of Professionals Who Can Help 

• Certified Divorce Financial Analysts (CDFA®): These are experts who help divorcing individuals understand how financial decisions will impact them short- and long-term. 
• Divorce attorneys: It can be useful to work with an attorney who has experience in high-debt or high-asset cases. 
• Financial planners: You may need help restructuring your finances post-divorce and planning for future stability. 

Post-Divorce Financial Recovery

The paperwork may be finalized, but for many people, the financial journey is just beginning after divorce. Here’s how to regain your financial footing and move forward with confidence. 

Create a New Single-Person Budget 

One of the most important things you can do post-divorce is to create a realistic budget based on your current income, living situation, and financial responsibilities. 

1. Calculate Your Monthly Net Income 

Start with your take-home pay (after taxes). Be sure to include: 

• Paychecks 
• Alimony or spousal support 
• Child support 
• Side income or freelance work 
• Government benefits (e.g., SNAP, unemployment) 

2. List Your Essential Monthly Expenses 

These are your non-negotiable costs. It can be wise to keep them as lean as possible, especially in the early stages of post-divorce recovery. 

3. Factor in Debt Payments 

List your required minimum payments for things like credit cards, student loans, car loans, personal loans, and medical debt. 

4. Add Savings and Emergency Fund Contributions 

Even if you can only save $25/month at first, now is the time to start building this into your budget.  

5. Plan for Variable and Personal Spending 

These are flexible categories you can adjust if you’re short on funds. They may be things like: 

• Subscriptions and streaming 
• Dining out 
• Clothing 

Manage Debt Repayment on One Income 

Paying off debt as a single person can feel overwhelming, and even more so if you’ve lost the second income that helped cover expenses. Some options to explore include: 

• Debt consolidation loans: These combine multiple debts into one monthly payment, ideally with a lower interest rate than the original debts. 
• Debt settlement programs: These often involve working with a company to negotiate with creditors and potentially reduce the total amount owed on qualifying debts. 
• Credit counseling: A nonprofit credit counseling agency can help you assess your finances and create a personalized debt management plan. 

Legal and Professional Resources

Whether you need help negotiating debt division, enforcing your divorce agreement, or rebuilding your finances, there are professionals who specialize in these situations. 

Divorce Attorneys and Legal Aid Services 

A qualified divorce attorney is essential when dealing with complex debt, high-value assets, or an uncooperative spouse.  

They can help with things like: 

• Negotiating fair debt and asset division 
• Enforcing prenuptial or postnuptial agreements 
• Protecting you from debts incurred without your knowledge 
• Ensuring debts are addressed in the divorce decree 

Certified Divorce Financial Analysts (CDFA®) 

A Certified Divorce Financial Analyst is trained to help individuals and couples understand how divorce will impact their long-term financial health. They work alongside your attorney or mediator to help with the numbers by:  

• Identifying which debts are marital vs. separate 
• Forecasting how financial decisions will affect your future 
• Creating post-divorce budgets and financial strategies 
• Helping you negotiate smarter financial settlements 

Mediation 

If you and your spouse want to avoid courtroom battles, mediation can be a more affordable and collaborative way to settle debt and property issues. A neutral third-party mediator helps you come to agreements that work for both sides. 

Financial Planning Services 

Once the divorce is finalized, your financial life will likely need to be re-examined. A financial planner can help you with things like:  

• Building a realistic post-divorce budget 
• Creating a debt repayment timeline and strategy 
• Planning for retirement on a single income 
• Adjusting your investment strategy based on new financial goals 
• Rebalancing insurance coverage and updating beneficiaries