In a divorce action, debt is divided the same way property is divided… “equitably”. This doesn’t necessarily mean equally, but generally the Court will divide the debt as equally as possible.
We often hear clients complain that they were not aware of the amount of the other party’s debt. Regardless of whether or not the other spouse is aware of the debt, it is presumed to be incurred for the benefit of the community and therefore will be divided equally. Under Arizona law both parties have the ability to bind the community to debt obligations (with only limited exceptions). Even those massages and facials, or Victoria Secret’s credit card, along with the Cabella’s card and Home Depot card are all community obligations and will be divided equally between the parties.
However, if one of the parties can show that the debt incurred by the other party did not benefit the community, the debt will be the sole responsibility of the party incurring it. Examples of this are gambling debts, hotels charges for an affair, or credit card charges for pornographic websites. The burden of showing these debts did not benefit the community falls on the party alleging the waste.
Debts incurred and secured by property (real estate, vehicles and motorcycles) are generally the responsibility of the party who takes the property in the divorce. For example, if husband wants to keep his motorcycle that is worth $10,000, but has a $12,000 loan against it, he will also take the entire debt. The same is true for the marital residence. So when you’re deciding whether or not you want the house in the divorce, you’ll have to decide if you can afford the mortgage payment that comes with it. If there is any equity in the house, you will also have to buy-out your spouse for his half of the equity.
To find out more about the division of property and debt in a divorce, contact Trullinger & Wenk at 623-536-5500.