When going through the divorce process, you will need to go through the legal process of determining who will be responsible for which debts. Perhaps your spouse is still paying out a student loan or has racked up a lot of credit card debt during your marriage. These are all financial situations you will want to speak with your attorney about to determine whether you are responsible for paying it off.
Under Maryland law, you are only responsible for your spouse’s debt if you agreed to be personally liable for the debt, or you co-signed the debt with your spouse.
For example, if you co-signed a loan or opened a joint credit card, you are both responsible for any debt incurred. If you are unsure, check the paperwork or pull a credit report. If your name is on the account or loan, you are going to be held responsible regardless of whether the loan was for your spouse or they incurred the debt.
The two most important things are (1) whose name is on the debt and (2) when was the debt incurred.
Here are the situations where you are NOT responsible for your spouse’s debt:
- You did not agree to be personally responsible, or co-responsible, for the debt.
- Your spouse’s debt occurred before your marriage and you were not added as a responsible person to the debt.
- Your spouse committed fraud and you have proof.
What if the debt is considered a marital asset?
If the debt Is tied to a marital asset (e.g. mortgage on the marital home, loan on a car), the debt Is considered a “marital debt” within the jurisdiction of the Court. However, if it is not tied to the acquisition of a marital asset (e.g. a personal credit card, student loans) then the Court does not have jurisdiction over it and cannot reallocate the debt. The Court can, however, require one spouse to pay a monetary award to the other in the divorce which could be used to pay off personal debt. Most settlement agreements will resolve the payment of existing debt and most Judges will consider each spouse’s personal debt when deciding financial Issues.