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Divorce isn’t just about dividing up what you own- it’s about figuring out who is responsible for what you owe. In Arizona, debt division can be as complicated as splitting assets, and sometimes even more stressful. Understanding the rules and process can help you avoid unpleasant surprises and protect your financial future.
In Arizona, community property laws mean that most debts accumulated during the marriage are shared responsibilities, regardless of which spouse’s name is listed on the account. This is true for credit cards, mortgages, car loans, and even tax debts. The law sees marriage as a partnership where both people share in the benefits and the burdens.
However, not all debts are treated the same. If you or your spouse took on a debt before the marriage, it is typically considered separate and remains the responsibility of the person who incurred it. The same goes for debts taken out after a legal separation or after a divorce petition is filed. There are also special rules for debts that are inherited or gifted to just one spouse.
Sometimes, things get mixed together. If you used marital funds to pay off a separate debt, or if you put your spouse’s name on a credit card that was originally yours alone, the court may decide that the debt is now partly community property. This is why documentation and clear records are so important.
When you go through a divorce in Arizona, the court’s goal is to divide debts and assets as fairly as possible. This doesn’t always mean a perfect 50/50 split, but it does mean that both spouses should walk away with a similar financial burden.
The process starts with each spouse listing all debts and providing supporting documents. This can include statements for credit cards, car loans, mortgages, business loans, and tax bills. The court then decides which debts are community and which are separate. If there is a dispute, the judge will look at when the debt was incurred, how it was used, and who benefited from it.
After classifying the debts, the court assigns responsibility. For example, if one spouse is keeping the family car, they might also take on the car loan. If both spouses benefited from a home equity loan, the court may order the debt to be split, even if only one name is on the paperwork.
The court also considers the ability of each spouse to pay. If one person earns much more or has more assets, they might be assigned a larger share of the debt. However, the court tries to avoid saddling one spouse with more debt than they can reasonably handle, especially if the other is better positioned financially.
A common mistake during divorce is believing that a court order alone will shield you from creditors. In truth, if a loan or credit card carries both names, the lender has the right to seek payment from either party if the account falls behind, even if the divorce decree assigns responsibility to your ex-spouse.
For example, if your ex-spouse is ordered to pay the joint credit card but falls behind, the credit card company can still come after you for the full amount. This can damage your credit score and lead to collection calls or lawsuits. To avoid this, many attorneys recommend closing or refinancing joint accounts before the divorce is finalized, or at least making sure the responsible party can pay.
Some debts are more complicated than others. Business debts may be divided if the business benefited the marriage, but if one spouse used business loans for personal expenses, the court may assign that debt solely to them. Tax debts from joint returns are usually split, but if one spouse can prove they didn’t know about hidden income or fraudulent deductions, they may qualify for “innocent spouse” relief.
Student loans are another tricky area. If the loan was taken out before the marriage, it’s usually separate. If it was used to pay for a degree that benefited both spouses-like a medical degree that increased the family’s income court might decide to split the debt.
Let’s look at a real example to see how these principles play out.
Background:
Jennifer and Alex were married for 14 years in Mesa. During their marriage, they bought a house, leased two vehicles, and ran up $25,000 in credit card debt. Alex also had $30,000 in student loans from before the marriage, and Jennifer took out a personal loan after they separated.
Step 1: Listing and Classifying Debts
Both spouses provided statements for all debts. The mortgage, car leases, and credit card balances were classified as community debts. Alex’s student loans were separate, since they were incurred before the marriage. Jennifer’s loan was also separate, as it was taken out after the divorce petition was filed.
Step 2: Assigning Responsibility
Jennifer wanted to keep the house, so she agreed to refinance the mortgage into her name and take on the payments. Alex kept one car and its lease, while Jennifer took the other. The court ordered the credit card debt to be split evenly, since both spouses had used the cards for household expenses.
Step 3: Protecting Credit
To avoid future problems, the court required Jennifer to refinance the mortgage within 90 days and for both spouses to close joint credit cards. Alex was responsible for his student loans, and Jennifer for her loan.
Outcome:
Both left the marriage with a fair share of debt, and neither was left responsible for loans they didn’t benefit from or couldn’t pay. By documenting everything and refinancing joint debts, they protected their credit and avoided future disputes.
Debt division in Arizona divorce is rarely simple, but understanding the process can help you avoid costly mistakes. Keep detailed records, be honest about all debts, and work with an experienced attorney to ensure a fair and workable outcome. Remember, the goal is to leave the marriage with a clean slate and a foundation for financial stability.
If you have questions about debt division or need help with a complex case, contact Moon Law Firm in Mesa. With the right guidance, you can protect your credit, your assets, and your peace of mind as you move forward.
For personalized advice on debt division in Arizona divorce, visit Moon Law Firm.
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