Most people beginning the process of a divorce in Pennsylvania are aware that a divorcing couple's marital assets will be divided in some way. This "equitable distribution" of a divorcing couple's property the proverbial questions of who gets what and how much typically is decided by the divorcing parties at the negotiation table or, if a negotiated agreement is not possible, by a judge's divorce decree.
A surprising number of divorcing persons, however, are not aware that "equitable distribution" includes not only the division of marital property, but also of marital debt.
Perhaps counterintuitively, "marital debt" does not include only debts jointly assigned to both spouses, such as a line of credit or the mortgage on a marital residence or vacation home. Marital debt also can include any debt incurred by either spouse between the date of the marriage and the official date of separation. Credit card balances, unpaid taxes, car loans, and any number of other debts can be marital debt, even if the accounts in question are under only one spouse's name.
So, yes, if your spouse was able to sock away $750,000 into an employer-provided retirement account while you managed the household affairs, you have a stake in that money. But if your spouse also ran up $100,000 in credit card debt while you were married, the law views part of that debt as yours. Exactly how much will be an issue for the negotiating table or, failing that, a matter for a judge to decide.
What's more, ignorance of your spouse's debt generally won't preclude responsibility for it. It is a truism that disagreements about money can and do wreck marriages, but the money troubles that spouses didn't even know about can exacerbate the already traumatic experience of divorce. This happens more than one might imagine. Many divorcing couples have struggled with issues such as a gambling addiction or compulsive shopping on the part of one spouse, or even just poor communication about household finances.
In these cases, the unaware spouse may find out about the debt for the first time from his or her attorney, who has obtained the information from the other spouse's attorney during the discovery process. Discovering debts that previously were concealed by a partner -- and one's potential responsibility for those debts, even if they were wholly incurred by the other spouse - is one of the most difficult aspects of the discovery process.
Some debts - such as gambling debts and other situations where clear, unambiguous abuse of trust has occurred may serve as exceptions to the general rule that marital debt is shared.
Debts that parties agree were jointly incurred or those less clearly attributable to a particular spouse, such as a credit card account that was routinely used for common household expenses, typically are divided in a manner similar to assets. If the parties cannot reach an agreement to divide the debt at the negotiation table, it will be up to a judge to decide what comprises"equitable distribution" of the debt based on multiple factors outlined by statute.
As always, however, each couple's situation is unique. To find out how your spouse's debt might affect you during a divorce, contact the Bucks and Montgomery county divorce attorneys at Williams Family Law for an initial consultation.