Dividing Marital Debt: Why It’s One of the Most Overlooked Risks

While many clients focus on dividing assets, debt often lurks under the radar—and yet financial disagreements, and debt in particular, are strongly linked to marital breakdowns. As people emerge from the pandemic economy, debt management remains one of the highest stressors in family transitions.

When we talk about “dividing the marital estate,” most people think of the home, retirement accounts, investments. But equally important—and often more tricky—is the marital debt: credit cards, personal loans, medical bills, car loans, and hidden liabilities.

Why debt is especially dangerous

• Debt often carries more stress and uncertainty than assets. If left unaddressed, one spouse might think “we’ll deal with it later” while creditors or markets move first.

• Research shows that financial disagreements and debt accumulation undermine marital satisfaction more strongly than many other conflict areas.

• In divorce, debt creates a silent hazard: you might receive your fair share of assets—but if you’re left with more than your share of liabilities, your post-marriage foundation is shaky.

  
  

Key steps in dividing debt fairly

1. Full disclosure: Ensure all liabilities are listed: known and hidden. Look at account statements, joint vs separate, authorized users, recent activity.

2. Understand how liability works: Joint debt means both parties may be liable even after divorce. A settlement may agree to payments, but creditors may still enforce.

3. Negotiate who pays what: It’s not always 50/50. Factors include who incurred the debt, who benefitted, financial capacity post-divorce.

4. Document agreements: Settlement documents should specify who is responsible, when payments will be made, what happens if a payment is missed.

5. Protect your credit: Consider closing or converting shared accounts, monitoring credit reports, or refinancing obligations into one name if possible.

6. Plan for the future: Even if a spouse “agrees” to pay, you may need contingency plans in case they don’t. Keep proof of your settlement and payment plan.

In mediation sessions, we emphasise transparency and fairness around liability. Many couples feel relieved when debt is treated with the same rigor as asset division. At Garske Divorce Mediation, we help parties:

• Review and list all debts together.

• Discuss the financial and emotional impact of each liability.

• Establish a clear payment timeline and accountability mechanism.

• Explore refinancing or insurance options (e.g., life insurance in case one party dies before shared debt is paid).

• Draft settlement terms with clarity and future-proofing in mind.

  
  

Divorce offers a fresh start—but not if you carry hidden or unfair debt burdens into your next chapter. By addressing liabilities with the same care you would your assets, you build a foundation of stability, respect, and mutual clarity. You owe it to yourself (and your family) to walk away as cleanly and fairly as possible.