What happens to debt in a divorce?

You and your spouse may have amassed many debts during the marriage. What happens when you divorce? As with marital assets, marital debts also must be divided.

What are marital debts? Debts that accrued during the marriage are considered marital debts. Common marital debts include mortgages, car notes, business loans, tax debts and credit card charges. Debts that occurred before the marriage, such as student loans, are not marital debts. Courts in Oregon divide marital debts in an equitable manner. That may or may not be an equal division.

Oregon courts consider may factors in dividing marital debts. For example, courts assign marital debts to the spouse who was responsible for creating them. The court is likely to assign more debt to the spouse who is better able to pay. The court’s goal is to reach an outcome that is fair to both parties. The idea is to put spouses in a financial position similar to what they enjoyed during the marriage.

The division of assets and debts occurs in two ways. The court decides, or the parties enter an agreement. If the parties agree, the court will incorporate the terms into the divorce decree, and the decree is just as enforceable as if the court decided the terms.

Dividing the marital debts determines the issue between the spouses, but the court cannot bind creditors. If your ex-spouse does not pay off a debt assigned to them in the divorce, you remain liable to the creditor. You may end up having to pay the debt and then seek reimbursement from your ex-spouse.

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