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Where does debt go during divorce?

Whether a couple was married for a few years or a few decades, untangling two lives can be difficult. This is because most married couples in Kentucky tend to accumulate quite a bit of marital property over the years — including debt. Debt does not just disappear during divorce, either. 

Is it joint or separate debt? 

Like with most property, debt that is taken on during marriage is considered jointly owned. This is true even if just one person’s name is on the account. A few examples of marital debt that frequently show up during divorce proceedings include: 

  • Credit cards 
  • Auto loans 
  • Mortgages 

Debt can generally be broken down into one of two categories — unsecured or secured. Credit cards are an example of unsecured debt, meaning there are no physical assets that “secure” the outstanding balance. In a divorce, either spouse might be ordered to pay back an unsecured debt. There might be unforeseen conflicts if a spouse is ordered to pay back a debt with his or her ex’s name on it though, so it is important to account for these possibilities. 

Dividing a secured debt is a little different. In general, the person who keeps the asset to which a debt is secured also takes on the responsibility of paying it back. For example, whoever keeps the car has to pay off the auto loan. Things get a little more complicated when it comes to something like a mortgage, as things like buying out the other spouse and securing a new mortgage are often involved. 

The thought of having to pay off debt by one’s self should not prevent anyone from pursuing divorce. Kentucky is what is known as an equitable division state, meaning that assets are divided equitably — or most fairly — during divorce. This means that neither spouse should end up with an unreasonable large portion of the marital debt.