Debt and Divorce

In Pennsylvania, the process by which a court divides marital assets and marital debts is called “Equitable Distribution”. Assets that are acquired by either spouse during the marriage, regardless of title, are generally considered “marital assets” and subject to Equitable Distribution. For example, a home purchased during the marriage but only titled to one spouse will still be divided between both spouses. 

The same rules generally apply to debts that were incurred during the marriage. Regardless of which spouse incurred the debt, and regardless of who is named as the debtor. For example: Husband and Wife have individual credit cards.  Wife pays off her balance every month, and at the date of separation, her balance owed on her credit card is $0. Husband has a habit of only making minimum payments on his credit cards every month, and carries a balance of $5,000 at the date of separation. Under Pennsylvania law, both Husband and Wife are equally responsible for the $5,000 in credit card debt. The same rule applies to mortgages, lines of credit, and personal loans. 

There are a few special instances where one party might be able to claim some indemnity from the other party’s debt, even if it was incurred during the marriage. 

1. Pre-marital or post-separation debts:

Debt incurred by one party prior to the date of marriage or after the date of separation is generally the sole responsibility of the party that incurred the debt.

2. Student Loans:

Generally, if taken out during the marriage, student loans incurred for the education of one spouse are considered “marital debt”, but a court may decide to differentiate between the amount of loan taken out for the student-spouse’s living expenses and the student-spouse’s tuition and books. If the non-student spouse co-signs for the loan, the court may decide that the entirety of the debt is a marital responsibility.  Likewise, if one spouse co-signs for a loan for one of the parties’ children during the marriage, the court will likely find that the loan is a marital debt.

3. Debt incurred in furtherance of an extramarital affair:

While rare, a court may decide that if one spouse incurs debt or unusual expenses in pursuit of an extramarital affair, the debt should be the responsibility of the spouse who incurred the debt, regardless of whether the debt was taken out during the marriage. It is important to remember that the burden of proof to show that the debt was incurred for this purpose is on the spouse asking to be indemnified for such debt, and your attorney can help you decide if the indemnification is worth the legal fees you would incur trying to prove it. 

It is important to remember that Pennsylvania Courts have vast discretion when deciding how to equitably divide the assets and debts.  Contact one of Obermayer’s family law attorneys to discuss your individual case and predict how a court might treat your debts in the event of a divorce.

The information contained in this publication should not be construed as legal advice, is not a substitute for legal counsel, and should not be relied on as such. For legal advice or answers to specific questions, please contact one of our attorneys.