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How debt is split in a divorce

On Behalf of | Feb 18, 2022 | Divorce |

There is a lot of discussion of what happens to the wealth of a couple who gets divorced in Maryland, but the rules for debt division are just as important. Resolving debt can be complex because different kinds of debt are treated separately and with different rules.

Dividing debt

The rules of divorce in Maryland mean that when it comes to dividing up the debt of the couple, the financial picture of the spouses plays a role in where the debt is assigned; it is not automatically divided 50-50. For example, if there is credit card debt on a card with just one person’s name on it, that person is solely responsible for the debt. Auto loans and mortgages are a lot more complicated. Often, it is easiest to just sell the house and use the cash to pay off debt. For a car, this is less practical due to the lower value of a used car. One person might need to take sole ownership of the car and the auto loan.

The judge has a lot of discretion when it comes to assigning debt. They will try to structure the divorce so that the debt division is fair and appropriate for the income level of each spouse. The responsibility and the ability to pay off the debt both matter. The better the spouses can work together to pay off the debt, the faster they will be able to recover and restore their finances.

During a divorce, debt is a challenging emotional and financial picture to unwind, and the outcomes can be hard to predict. The judge will strive to make a fair and reasonable distribution of marital debt.