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What Happens to Debt During a Divorce?

It is optimal for divorce decrees to apportion debts in such a way that avoids future litigation.

The process of dissolving a relationship and separating assets in a divorce can be very stressful and difficult. This is compounded when the spouses have outstanding debts to divide as well. There are various forms of debt that are common in the division of a marital estate.

First, credit card debt that is acquired either jointly with both parties signing on a credit account or individually by one spouse is subject to division. Credit card debt is unsecured by any assets and it is preferable for the party who is the primary debtor on the account, or the spouse who is contractually obligated to pay the debt to the credit card company, to be awarded the debt in the parties’ divorce. This is because a spouse who is awarded the credit card debt of the other spouse has little to no incentive to pay that debt, other than to avoid the possibility of a future lawsuit to enforce the provisions of the divorce decree.

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