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Divorce & Debt

What do I do about our debt?

Minnesota Law on Marital Debt

Minnesota is an equitable division state. What this means is that the division of assets and debts in a divorce must be just and equitable, although not necessarily equal. While in most cases assets and debts are divided 50/50, a court is not required to do so should a divorce end up being resolved by trial.

Marital vs. Non-Marital

Like assets, debts are classified as marital or nonmarital. While the timing of the acquisition of an asset and the source of that asset are two of the factors when determining whether it is marital or nonmarital, these factors are not as important in determining whether a debt is marital or nonmarital. What is important are such things as who incurred the debt and when, the purpose of the debt, whether both parties consented to the incurring of the debt, who will benefit from the debt and ultimately who is better able to pay the debt after the divorce is over.

What about the Credit Cards?

Credit cards can add up to significant debt in a marriage, particularly in today’s economy. Many people have cards that are held both jointly and individually. While all of the debt owed on a credit card may be considered marital, the debt may be apportioned unequally depending on the reason the debt was incurred. If one party is using a credit card for cash advances to gamble with, it is likely that he or she will have to assume that debt in a divorce. This is not a debt that likely benefited the marriage and often these kinds of debts and/or the extent of these debts are unknown to the other spouse.

Is it always divided 50/50?

Another consideration is determining what is equitable in the division of debt is the parties’ ability to pay the debt. A greater share of debt may be assigned to the spouse who has a higher income, has been awarded a greater share of assets or incurred the debts(s) without the knowledge or consent of the other spouse.

The bottom line is that while debts (like assets) are equitably divided in a divorce, each case is unique and the factors that are looked at in a final determination of who is going to pay what include such things as the reason the debt was incurred, when it was incurred and each party’s ability to service the debt after the divorce is finalized.

Contact our office to meet with one of our experienced Divorce Lawyers if you have questions about your marital debt. Our experience with such matters will give you the knowledge you need going forward.