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In Pennsylvania, the division of debt in a divorce is handled under the state's marital property laws. This means both spouses are typically responsible for debt acquired during the marriage, regardless of whether it was incurred by one or both parties. 

Marital Debt vs. Separate Debt 

The court characterizes the debt as either marital or non-marital before dividing it between the spouses. Marital debt is generally any debt that was incurred during the marriage and prior to separation.  

This can include anything from mortgages and car loans to credit card debt and personal loans. It does not matter who made the decision to acquire the debt; if it was acquired during the marriage, it is considered marital debt and is subject to division upon divorce.  

On the other hand, non-marital debt, also known as separate debt, is any debt that was incurred by one spouse before the marriage or after separation. This type of debt is not usually divided in a divorce and remains the responsibility of the spouse who incurred it. 

When a couple divorces, the court will divide marital property and debt through a process called equitable distribution. We will discuss this in further detail below.  

Equitable Distribution of Marital Debt 

Equitable distribution does not necessarily mean a 50/50 split. Instead, the court considers a variety of factors to determine what is fair under the circumstances. Some of these factors include: 

  • The length of the marriage. 

  • Each spouse's income and earning potential. 

  • The standard of living during the marriage. 

  • Each spouse's contribution to the acquisition of marital property and debt. 

  • Whether one spouse will be awarded custody of minor children. 

While separate property is not subject to division during divorce, the court will also take into account any separate property that each spouse brought into the marriage. Once the court has determined how to divide the marital property and debt, it will issue an order outlining each spouse's responsibility for paying off the debt. This may involve selling assets or dividing up accounts to ensure that both spouses are able to pay their share of the debt. 

It is also important to note that creditors are not bound by the court's order. If a couple jointly owes a debt and one spouse fails to make payments, the creditor can still pursue the other spouse for payment. Thus, following the division of debt, you should consider refinancing or taking other steps to remove either party’s name from loans that are no longer their responsibility.  

Co-signed loans are generally the responsibility of both spouses, regardless of who benefited from the loan. If one spouse fails to pay off a co-signed loan after the divorce, the other spouse could be held liable by the lender. Therefore, it is crucial to handle these matters carefully during the divorce process. 

What Can Complicate Debt Division  

Mistakes in bankruptcy filings, co-signed loans, and other unique circumstances can significantly impact debt distribution in a divorce. For instance, if a spouse files for bankruptcy during the divorce proceedings, this could complicate the division of debt. It is imperative that you are honest with your attorney about your separate and marital debts.  

How Are Student Loans Treated in Divorce?  

Student loans that are acquired during your marriage are considered marital property. However, due to the court ruling in Hicks vs. Kubit, student loan debt can be allocated solely to the party who acquired the loan in cases where the party who took out the loan was the “sole and exclusive” beneficiary of the educational benefits.  

Consult with Our Firm 

It is important to note that the above information provides a general overview of how debt is divided in a Pennsylvania divorce, but the specifics can vary based on individual circumstances. For personalized advice, it is best to consult with an experienced attorney. 

At Cairns Law Offices, our attorney can help you prepare a debt settlement agreement and smoothly navigate the debt division process. With decades of legal experience, our attorney offers our clients affordable, individualized divorce services.  

To schedule an initial consultation or get started on your case, call (888) 863-9115.  

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