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Strategies for Handling Debt in a Divorce

  • Post category:Divorce

going-bob-Lancaster-County-PennsylvaniaBy Robert M. Going, Jr., Attorney

Divorce is never easy. Not only is the process emotionally taxing, but when debt is involved, splitting up the assets and money owed becomes especially thorny. Each state has its own laws and norms for handling the process of dividing marital debt, property, and assets. As such, filing for divorce has a wide range of consequences in different states.

Every case is unique, but there are some common trends that fit all cases. Therefore, it is important for Lancaster County residents to know how divorce property distribution works in Pennsylvania.

Pennsylvania is an Equitable Distribution State

Dividing marital debts and assets follow the doctrine of “equitable distribution” in Pennsylvania. Other states follow a “community property” doctrine, where each spouse is entitled to 50 percent of all property regardless of what they brought to the marriage.

Equitable distribution, however, is based on a wide variety of factors. One of these is timing. For instance, if one partner owned a house before getting married, as part of the settlement that partner can keep the property. Pre- and post-nuptial agreements can also play a big role. The state of Pennsylvania usually counts personal property as income, debts, and assets acquired before marriage.

Personal property can include vehicles, houses, businesses, art, investments, retirement accounts, and much more. Some things can be exempt from this classification, such as personal gifts and inheritances acquired during the marriage. Debts, on the other hand, are usually considered shared as long as they’re acquired during the marriage.


It isn’t always down to a court ruling to decide how property is divided. Couples can choose on their own how to distribute their debts and assets. One option is mediation, where the couple sits down (with or without lawyers) to negotiate a property distribution agreement. The court only becomes involved when couples refuse to negotiate or cannot settle on a shared agreement. A Lancaster divorce attorney can serve as a skilled negotiator to help get their party the best possible settlement.

Spouses Aren’t Necessarily Responsible for Debts

Although debts are considered during the distribution process in Pennsylvania, it is possible for debt to be exempted under some circumstances. Here are two situations to consider:

  • A vacation house bought before marriage. This is a clear-cut scenario. If a spouse purchases a second house prior to marriage, keeps it in their name, and keeps the house after the divorce, the other spouse is unlikely to be held responsible from any debts associated with it.
  • A vacation house bought before marriage but improved with both spouses’ money. This case is more complex. If one party owns the property but the other took out loans to renovate it, then the non-owner spouse could be held responsible for some or all of the debt outstanding on that loan. This is considered “comingled” debt, and it is quite common. Because many people have credit cards in their name before getting married and spend it on shared purchases, the credit card can become marital debt.

Debt under both spouses’ names is usually broken down as the continual responsibility for each of them. During negotiation, couples can agree to take on debt in exchange for other assets. However, it is wise to consult with a qualified divorce lawyer to understand the best tradeoffs and avoid any unexpected negative consequences.


Protecting Against Unfair Debts

Naturally, in many divorce cases, one spouse has been financially irresponsible (whether intentionally or not). Both spouses suffer the effects of this since one spouse can impact the other with poor credit ratings, liquidations, or, in the worst cases, bankruptcy. Still, there are some ways to minimize the financial risks.

A good divorce attorney can include an indemnity clause in divorce settlements. That allows the client to seek restitution if their spouse fails to hold up their end of the agreement and misses payments on the debt. Divorce lawyers can also help with liquidation or refinancing in a divorce agreement. Refinancing can help get a spouse’s name off the loan. For shared assets, like a shared home, selling the house and splitting the proceeds is often the best route.

At the beginning of the divorce process, it is important to revoke the spouse’s authorization to all credit cards and remove their name from the card. That applies to bank accounts, too. Joint credit cards and bank accounts should be canceled. If someone is responsible for paying off their spouse’s debts, their spouse is responsible for ensuring they make payments on time. The spouse should check the payment status for all accounts and monitor their credit report so any inconsistencies can be identified as soon as possible.

Getting an Advocate

Some couples can divorce amicably, without hostility or significant conflict. But they are the exception, not the rule. It’s normal for couples to argue over their debts and assets, and many people aren’t aware of their options and rights in this difficult process. An experienced Lancaster divorce attorney can help inform their client, anticipate potential issues, and determine whether settlements are fair. If you or someone you know is divorcing, Going and Plank’s experienced family lawyers can offer a free consultation. Don’t go through it alone. Contact us today to get an advocate on your side.


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