As you move through move through negotiating your marital settlement agreement you will realize that debts, just like the assets, are an area you will need to work out with your spouse.
The state of Pennsylvania is not a community property state; we are a common law state. In general this means that each spouse is responsible for his or her own debt. An exception would be if monies were used to purchase an item which benefitted the general household, like a washer machine.
Before negotiating how you are going to handle marital debt make sure to have a detailed list of everything you as a couple owe. Overlooking something now can have significant financial repercussions later on. If you feel you need help seek a well qualified financial professional to assist you, the fees are normally worth it in the long run.
Some of the items you may want to review for potential marital debt are:
- Credit cards;
- Liens; and
- Promissory notes.
If your spouse had debt before your marriage normally he or she is responsible for the debt. In the case of you and your spouse having jointly refinanced pre-marital debt, then the both of you would be held responsible for the debt. Be careful of joint accounts which are not closed, like credit cards. They can be used to pay off pre-marital debt. In this case you would then also be financially responsible.
Joint credit cards can also be an area of debt, even if one spouse did not use the card. If only one spouse used the card and the other spouse did not creditors can still go after both spouses since both individuals signed for the credit card. If this is your case, notify the credit card company of your uncontested divorce and that you no longer want responsibility for future debts on the credit card.
There is something called joint benefit in the state of Pennsylvania. If your spouse made purchases (material items or services) which benefitted the household you can be liable for this debt. It does not matter if you co-signed or not. Items such as a child's medical bill or food fall under this category.
In addition, a spouse can be held liable for his or her spouse's medical bills. Since Pennsylvania is a common law state medical bills are considered part of the household expenses.
Lastly, your separation date is more significant than you might imagine. This date is the date when you are generally no longer responsible for debt your spouse has incurred. There are exceptions, such as monies used for the children and family necessities – i.e., food and shelter.