In Arizona, the division of debt during a divorce is governed by the state’s community property law, which generally considers debts (as well as assets) incurred by either spouse during the marriage to belong to them equally. The starting point in dividing marital debt is a 50/50 split, but there are important equitable considerations that may lead the courts to deviate from an equal division.

Under Arizona Revised Statutes § 25-318, any debt incurred by either spouse during the marriage is generally presumed to be for the benefit of the marital community. This includes credit cards, car loans, mortgages and other obligations. However, judges have discretion to consider that certain specific situations may justify an unequal division of debts.

A significant exception is for debts that were not incurred for the benefit of the marital community. If one spouse borrows funds for their own interests, from which the other spouse did not benefit, the court may find that dividing these debts equally would be unjust. Examples are debts run up by gambling, carrying on an extramarital affair or spending secretively. In those cases, the debt may be assigned to the spouse who incurred it, diminishing their share of the marital assets.

Another exception is for prenuptial or postnuptial agreements. These may designate certain debts as separate property, even though incurred during the marriage, and thus protect one spouse from liability for the other’s individual borrowing.

Many debts are tied to particular assets, such as real estate properties and motor vehicles. Judges typically assign the debts to the spouse who is awarded the asset. So the spouse who gets the family would also be responsible for the mortgage. Conversely, a forced sale of the family home during asset distribution would require splitting the asset value and the debt.

While a divorce decree can assign responsibility for a particular debt to one spouse, this does not remove the other spouse’s legal liability in the eyes of outside creditors. If both names are on the account, creditors can pursue either or both parties for payment, regardless of the court’s internal assignment of debt. In the case of a mortgage or car loan, the spouse receiving the asset may have to refinance the loan in his or her own name.

Note that debts acquired after the divorce petition is filed or after the spouses have separated generally do not count as community obligations, even if the spouses are still legally married.

If you are worried about becoming liable for your spouse’s debts during divorce, call Clark & Schloss Family Law, P.C. in Scottsdale, Arizona. Our attorneys have decades of divorce and property division experience. Please call 602-789-3497 or contact us online to schedule a consultation.