How Marital Debts are Divided in a Divorce

If you are currently going through a divorce, you most likely have marital debts that will need to be divided between you and your spouse.  In fact, recent statistics show that debt and other financial problems are often a primary cause of divorce.  Under Arizona’s community property law, all marital property and community debts will be divided between the spouses in a fair and equitable way.  If you want to ensure your debt division is fair, please reach out to a debt division attorney in Phoenix, AZ. 

Understanding Community Property and Debt in Arizona

Arizona is a community property state, meaning that all property and debts accumulated during a marriage will be held jointly by the couple.  In a divorce, all community property, including marital debts, will be divided amongst the couple. Separate property will not be divided.  It is important to know what property is considered jointly held and which property is separate in determining the division of assets and debt.

Division of Community Assets and Debts in an Arizona Divorce

Arizona law dictates that assets and debts that were acquired during a marriage will be considered community property and subject to division in a divorce.  Community property laws strive to divide assets and debts equally.  Sometimes this is 50/50, but the court has the discretion to distribute in a way that is equitable and fair, which is not always a 50/50 split.  Items that are considered community property include the following:

• Real Property- any real estate holdings, including the marital home
• Personal Property- cars, clothes, jewelry, furniture, electronics, and other personal items
• Investments – Money, stocks, bonds, profit-sharing or pension plans, and IRAs
• Debts incurred : Debts including credit cards, mortgages, home equity loans, auto loans, tax debts, and personal loans.  According to Arizona Revised Statute §25-318, marital debts will also be divided equitably.  

Community property rules apply to property and debts accumulated from the date of the marriage until the date of divorce filing.  Even if one spouse was not working during the marriage, the property accumulated is considered to be jointly owned. The same applies to debts incurred during the marriage. Even if only one spouse took out the debt, it will be considered a joint debt.   

Sole and Separate Debts

Property that was accumulated during a marriage will be considered community property except in rare exceptions. In addition to pre-marital property (assets or debts that a person had before marriage), there are some debts that will be considered separate property.  Examples of sole and separate debts include student loan debts (which were taken out with the intention of benefiting only one person) and debt that was taken out by a single spouse after the date of divorce filing.  If you have questions or concerns about sole and separate debts, contact the Law Office of Cosmas Onyia today.  

Complex Property Division Lawyers

If you are going through a divorce involving high net worth and valuable assets, you should reach out to an experienced family law attorney.  If you are going through a divorce and have debts or delinquencies, then strong legal representation can dramatically affect the outcome of your case.  Do not gamble with your financial future! If you want to make sure your debt division is fair, contact a Family law attorney in Phoenix, AZ today.

Frequently Asked Questions Regarding Debt Division in Arizona

How will my debt be divided in an Arizona divorce?

Arizona follows an equitable distribution law regarding property division.  Debt will be divided in a way considered fair by the court.  This may be 50/50 but also might be slightly different depending on many factors.  As the court has wide discretion, it is always recommended to try to work out an agreement with your ex.  It could also save a lot of time, money, and stress involved with going to court.

Can a wife be held responsible for a husband’s debt? 

 Yes. If a debt was incurred during the duration of a marriage, then both spouses can be held accountable for it.  

What is a debt incurred primarily for the benefit of one party?

If a debt was taken out during a marriage, it will most likely be considered community debt, and both people will be held responsible for it.  Under certain limited circumstances, student loans, which were taken to fund one person’s education and professional training may be assigned to one spouse. It would not be fair for someone to pay for another spouse’s education.  

Does it matter who purchased an asset? 

Under Arizona community property law, a divorce will require a division of all the marital property and debt, no matter who bought it, who earned the money to pay for it, or whose name is on the debt.  Even if only one person purchased an asset or took on a debt, it will be considered as though it was done jointly with their spouse and community property.  

How can the Law Office of Cosmas Onyia help?

It is always recommended to have a qualified and knowledgeable attorney at your side in any family law case.  Our firm has helped thousands of clients work out equitable property and debt division plans through mediation and in the courtroom. We will first try a settlement, but if the case proceeds to court, the judge will make the final decision. The Law Office of Cosmas Onyia will help you to get fair and equitable property and debt decisions.

Why Choose Cosmas Onyia for Your Debt Division Case?

When dividing debts in a divorce, the stakes are high. Making a single mistake or overlooking the smallest detail can leave you with significant financial repercussions. At the Law Office of Cosmas Onyia, we ensure that your financial interests are protected throughout the divorce.

We will identify community debts

One of the critical parts of our job is to gather all possible records related to marital debts like credit card statements, loan agreements, mortgage documents, and even text messages. We will use these records to establish which debts are “community debts” and subject to division.

We focus on negotiated solutions

While court intervention is sometimes unavoidable, our first approach is to try and reach an amicable agreement through negotiation or mediation. These methods are less stressful for all parties involved and can save you thousands of dollars in court fees.

We will prioritize your credit protection

Divorce and debt division could impact your credit score, but we can mitigate this effect by advising you on which debts to pay off first, how to separate your joint accounts, and how to freeze accounts to prevent further debt accumulation. Where necessary, we will hire financial experts or CPAs to provide you with astute advice.

We will strategize for high-net-worth divorces

Attorney Cosmas Onyia is well-versed with complicated financial portfolios, having handled divorces involving family businesses valued in millions and investment portfolios that include stocks, bonds, and real estate. We will customize our strategies to ensure the marital debts are divided in a financially prudent manner while accounting for tax implications. 

Phoenix Debt Division AttorneyIf you are going through a divorce and need guidance on debt division, do not delay seeking out an experienced Phoenix debt division attorney.  Fairness in debt division is essential to your financial future. You want to start a new life after your divorce with as little debt, frustration, and stress as possible.  The Law Office of Cosmas Onyia is the firm you need to feel confident in your new life. With over 20 years of experience in and around Phoenix, AZ, we can offer compassionate experience for even the most complex family law cases. Call for your free consultation at (602) 265-5200.