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Dealing with Your Spouse’s Debt During a Divorce

Posted On August 8, 2022 In Divorce

Dividing marital debt in an Arizona divorce can be complicated. But what if you think certain obligations belong solely to your spouse? Arizona law may not agree.

Arizona is a Community Property State

Arizona is a community property state meaning that any assets and debts acquired during a marriage belong to both spouses and should be divided as such between the two. This does not apply to separate assets and debts.

Separate Debts in Arizona

Separate debts in Arizona are debts that a spouse acquires prior to marriage or once the divorce proceedings begin. These debts belong solely to the debtor spouse. Debt accrued after the service of the divorce petition cannot go against the non-debtor spouse’s credit rating.

Exceptions to Arizona’s Community Property Laws

Spouses may bind one another to community debt unless that debt arises from one of the following exceptions:

  • Destruction of property;
  • A guarantee or indemnity transaction;
  • Excessive or unusual spending;
  • A transaction for the purchase, sale, or encumbrance of a real estate interest that is not an un-patented mining claim or a one-year lease;
  • Theft or fraud in the disposition of communal or joint property; or
  • Actual damages and judgments from conduct that resulted in the criminal conviction of either spouse in which one spouse or a child was the victim.

If a spouse commits either of the first two activities, the court must award the resulting debt to that spouse alone. Otherwise, the court may order either spouse to pay most or all of the debt. For instance, a spouse who overspends on an affair will most likely be ordered to pay for those debts.

Community Debts are Equitably, Not Equally Divided

Although community debts belong to both spouses, the court does not have to divide them equally. Instead, the court considers all marital factors to reach an equitable decision. The final debt division in a divorce is rarely 50/50.

The court typically tries to avoid a grossly unfair result when dividing debts. For example, if a couple divorces shortly after one spouse incurs student loan debt for a professional degree, it would be unfair to divide that debt equally between them. The non-debtor spouse will not benefit from the professional education of the other.

Creditors are Not a Party in a Divorce

Finally, creditors are not a party in a divorce case. They do not care which spouse is assigned what debt in a divorce order. If the assigned spouse defaults on a debt, that creditor can sue the other spouse for repayment.

The spouse who gets saddled with the debt can then sue the other spouse in family court for non-payment.

Contact an Experienced Arizona Divorce Attorney Today

If you are concerned about asset and debt division in your Arizona divorce, reach out to the professionals at Wilson-Goodman Law Group, PLLC. We can help you identify and value separate and marital property and advise you of any tax consequences or liabilities involved in marital property division.

Do not wait to speak with a Chandler divorce attorney. Preparation is the key to a successful divorce outcome. Call or contact Wilson-Goodman Law Group, PLLC, online now to schedule your consultation.