The answer is: yes and no. The liability of debt is governed by A.R.S. § 25-215. It effectively states that any debt incurred during the course of the marriage that was intended to benefit the marriage is considered “community debt” for divorce purposes. This means that if you and your spouse have credit card debt or a car loan, those debts will likely be divided equitably between the parties.
One Spouse Can Put Both in Debt
Either party is able to bind the other in debt. This means that if you and your spouse have a joint credit card and your spouse decides to go on a shopping spree running up ten thousand dollars in credit card debt, the balance is likely divisible between both parties (this is true even if you had no idea and did not consent to the charges). A good tip is once it is clear you are moving forward with a divorce, cancel joint credit cards or at least ask that you be removed from the account. This would strengthen your argument that any charges incurred after that point are separate and not part of the “community property.”
If your spouse had ten thousand dollars of credit card debt on a personal credit card in which you are not authorized to access, there is a good chance you would not be liable for a portion of this debt once the division of community property is complete. This is because the debt was taken solely on the other spouse’s name and was not intended to benefit the marriage. The same rationale could be applied to other personal debts that either you or your spouse brought into the marriage, but continued to treat as a separate liability.
What about student loans?
This is an often contentious issue since a common scenario is one spouse attended school while the other spouse worked to support the household. The spouse graduates and has a significant amount of student loans. In many instances, the spouse who was not in school will still be liable for a portion of that student loan debt. Though, there are exceptions. For example, if the spouse took out the loans prior to the marriage, then it may be considered separate debt that is not divisible between the parties.
Watch for Community Debt Language in Any Proposed Settlement
Many divorces in Arizona are resolved not in court, but by a mediator or through mutual consent to a proposed settlement agreement. These agreements can stipulate a division of marital assets. What you need to watch out for is language requiring you to pay “all community debts” as an offset against assets. An example of how this language can create financial hardship is the case of Wine v. Wine, 14 Ariz. App. 103, 480 P.2d 1020. In this case, the settlement agreement included a provision requiring the husband pay “all community debts.” It was later discovered that the wife incurred taxes, interest and late payment penalties on her portion. Even though the wife incurred the penalties, the husband was responsible for paying the additional fees and taxes under the terms of the settlement agreement.
Speak to an Experienced Tempe Divorce Lawyer
As you can see, the division of assets and liabilities can get complicated in a divorce. This is why you need an experienced attorney on your side that has actual experience advocating for maintenance modification. The Law Office of Ronald L. Kossack is here to help. We assist residents of Tempe, Arizona, and surrounding areas in all aspects of divorce matters, including alimony. To speak with a lawyer contact us online or by calling 480-345-2652.