How is Debt Divided in a Missouri Divorce?

Broken heart on dollar banknote - Concept of how is debt divided in divorce.

Marriage is a financial relationship as well as an emotional one. During a marriage, a couple may acquire not only property together, but also debts. If you and your spouse are parting ways and you’ve incurred a substantial amount of debt, you may be wondering, “how is debt divided in divorce?” The answer to this question depends on how these debts are characterized — and whether they were assumed before marriage.

How is Debt Divided in Divorce?

Missouri follows the rule of equitable distribution when it comes to dividing marital property, assets, and debts in divorce. However, equitable doesn’t mean equal — it means that a judge will allocate responsibility for marital debts in a way they deem fair. Rather than let a judge decide how this debt will be distributed, spouses are free to reach an agreement regarding how to divide debt and submit it to the court for approval.

Debt division is often one of the most contentious issues when ending a marriage. In the event spouses cannot reach a settlement concerning their marital debts, a court will evaluate a number of factors to determine a fair outcome. For instance, a judge will consider the length of the marriage, each spouse’s economic circumstances, the value of nonmarital property set apart to each spouse, which parent has child custody, and the conduct of the parties during the marriage.

Types of Debts in a Missouri Divorce

Dividing debt in a Missouri divorce can be complex. There are three ways debts, property, and assets can be characterized during divorce proceedings. However, it’s important to understand that typically, only debt acquired during the marriage will be subject to division in divorce. In a Missouri divorce, debt is categorized as follows:

  • Separate debts — Separate debts are considered any acquired by either spouse before the marriage. These types of debts are the responsibility of the spouse who acquired them.
  • Marital debts — Marital debts are any incurred during the course of the marriage, regardless of which spouse’s name is on the debt. These types of debts are subject to division in divorce.
  • Commingled debts — In some instances, debts may be commingled. This means something that was once a separate asset may be classified as a marital asset, such as in cases where a separate debt was paid with marital funds.

Credit card balances, mortgages, vehicle loans, personal loans, tax debt, certain medical debt, and business loans are just a few examples of debts that may be incurred during marriage that come with shared responsibility. But if your spouse took out debt without your knowledge and you did not benefit from it, you may be able to argue to the court that you should not incur the burden of having to repay it.

Is Student Loan Debt Divided in Divorce?

it comes to student loans, how the debt is divided will depend upon when it was incurred. Student loans taken out before marriage do not become the responsibility of a spouse in divorce. In this case, it would remain the sole debt of the person who took out the loan and not subject to equitable distribution.

If a spouse co-signed the loan, or it was refinanced during the marriage, division in divorce can become much more complicated. Additionally, in some cases, a spouse might take out a student loan during the marriage to help pay for the couple’s living expenses while they are attending school — in these instances, both spouses might share responsibility for the debt.

What is the Effect of a Prenup or Postnup on Divorce and Debt Responsibility?

In the event a couple entered into a valid prenuptial or postnuptial agreement, this document may determine responsibility for debts in divorce. A prenup is a contract entered into before marriage, while a postnup can be executed at any time during the marriage. Both prenups and postnups are legally enforceable under Missouri law as long as they are conscionable, entered into freely, and full financial disclosure has been made.

While a prenup can often be helpful if one spouse is bringing a substantial amount of debt into a marriage, a postnup can be signed if a spouse will be incurring considerable debt during the marriage. These documents allow spouses to clearly specify how they would wish the debt to be treated in the event of divorce. They can prevent debt belonging to one spouse from becoming commingled with marital debts and specify that certain debts incurred during the marriage be treated as separate property.

Contact an Experienced Missouri Divorce Attorney

If you are considering parting ways with your spouse, it’s vital to have a skillful attorney who can advise you regarding your rights and options when it comes to divorce and debt responsibility. Divorce and family law attorney Mark A. Wortman provides reliable representation to clients in the greater Kansas City, Missouri area who are facing divorce and a wide variety of family law matters. To schedule a confidential consultation to learn how he can assist you, please contact him today online or by calling (816) 523-6100.