Marital vs. Non-Marital Debt: Who Owes What?

You and your spouse have come to the conclusion that it’s time to go your separate ways and file for divorce. You’ve figured out who gets the cars, the house, the furniture, even the blender someone bought you for your wedding. But when it comes to debts, how do you split those?

Debt Incurred Before Marriage

In Maryland, debts incurred prior to a marriage are not considered marital debt. Md. Code Ann., Family Law, §4-301. That means your spouse’s car payment, credit card debt, or student loans that were taken out prior to your marriage **will not** be your responsibility after your divorce. If the home in which you live was purchased by one or the other partner before you married, any mortgages or other liens on that house taken out before the marriage are also considered non-marital debts.

Debt Incurred During Marriage

Debts that were incurred during the marriage, however, are considered joint debts. Both parties can be held liable for the repayment of any debts – credit card, home loans, student debts, court-ordered judgments – incurred during this time period. [1] This even extends to credit cards taken out without your knowledge or charges racked up by one party, even after separation.

What does this mean for my credit?

A high debt to income ratio, especially if minimum payments are not regularly being made, can negatively impact your credit score. If you and your spouse agree to split debts, or for one of you to take on the entirety of a debt, and that person simply stops paying on the debt, it could spell financial disaster for the other person.

How can I pay off those debts?

If you and your spouse are facing a large amount of marital debt at the time of your separation, you do have a few options.

1. You can utilize marital bank accounts and assets to pay off the debts. While this is the ideal situation, it isn’t always a feasible one.

2. Divide up the shared debt equally between spouses and transfer it to individually held cards. This only works for credit card debt.

3. Draw up a signed agreement clearly stating which party is responsible for paying which debt. Unfortunately, creditors do not have to abide by these agreements and can ding the non-responsible party’s credit or continue hounding that person for payment.

4. You and your spouse can agree to split up the debts and assets in proportion to one another. For example, if one spouse agrees to take on all the credit card debt and be responsible for the payments, he or she can also be given the entirety of a bank or retirement account to help offset the debt.

What about debts incurred during the marriage of which I had no knowledge?

Unfortunately, incurring consumer debt is common following a separation. Securing housing, furniture, transportation, and other necessities for two households instead of one is incredibly expensive, especially if you have children. This can result in a large amount of money being spent during the separation period and prior to the finalization of the divorce. This is still considered marital debt. If you believe there has been substantial debt incurred without your consent or knowledge for which you may be liable, consult with an attorney about your options in this situation.

Divorce is never easy, but the added stress of any amount of debt that must be paid or s plit can increase tensions and leave you feeling worse than when you began the process. Contact the experienced staff at The Law Offices of Sandra Guzman-Salvado for guidance through any and all matters of divorce, custody, and family law.

[1] “Spouse’s Debts,” The People’s Law Library of Maryland, peoples-law.org.