Divorce and Debt: Understand How They Collide and Affect Each Other

Divorce is never an easy decision. Dissolving a marriage can be a very emotional process. It impacts not only the affected couple but also their children, parents, other relatives, and friends that were made during the marriage. 

Debt is one of the main reasons why many couples choose to seek a divorce. They may feel like things are spiraling out of control, or that one partner’s spending habits are excessive. As a result, how to handle money in a marriage is a frequent cause for concern.

Today, we will talk about what happens to the debt during a divorce in Maryland. We will identify who is responsible for paying what bills and any legal actions that can be taken. Bankruptcy will also be covered and how it can impact your financial obligations.


Look At When The Debt Occurred.

The first thing you should do is determine when the debt first happened. Was it before or after you got married? If property (land, a house or a vehicle, etc.) was purchased, credit card balances were made, or any type of loans were taken out before tying the knot, they are considered to be premarital debts.

The person who incurred any debts made before marriage is the only one responsible for those expenses. In other words, if a husband charged $10,000 worth of fishing gear on his credit card before getting married, his wife does not have to worry about paying that credit card bill. 


Find The Debtor’s Name.

In the state of Maryland, the law looks at the name of the person on each debt. It sees debt as a legally binding contract that was made between the creditor and the debtor. For instance, if the mortgage is in your name, you’ll be responsible for paying that bill every month. If your home’s utilities are listed in your spouse’s name, they will be responsible for those charges.

Maryland law also connects the name listed on debt with ownership. For example, if a car loan is in your name, you’ll still have ownership of the vehicle in addition to paying on that loan. This can also make identifying and dividing assets easier during a divorce. The courts will often decree that the person whose name is on a certain asset will be allowed to maintain possession of that item. 

It’s not uncommon for married couples to have joint accounts. One partner may also be added to their spouse’s credit card account as an authorized user. A spouse may request to be added as an authorized user on their partner’s loan or credit card account if the other person’s credit score or credit rating is higher than theirs.

Even if an account has an authorized user, that person isn’t legally responsible for that specific debt. If your spouse runs up a large balance on your credit card, you are the only person who will be required to pay that balance. That is why it is important to pay attention to your current balances before filing for divorce so that you can prepare for these or other similarly unexpected expenses.


What About Bankruptcy?

Bankruptcy is usually a last resort for settling debts. People and organizations file for bankruptcy when their debts far exceed their regular income. Bankruptcy also causes creditors to stop collecting on those debts. This is referred to as an automatic stay.

There are different kinds of bankruptcy. A Chapter 13 bankruptcy lets debtors continue making payments for up to five years. Debtors also agree under that arrangement to not take on any more debt during that time frame unless the court approves it. Chapter 7 bankruptcies are usually handled within about a year or less. 

Some couples may be wondering whether to file bankruptcy before or after their divorce has been completed. There are different advantages and disadvantages to each approach. You can contact us for a free consultation before you decide.


You may be able to protect more items (such as your house, car, boat, and other similar assets) than you could if you were to file for bankruptcy as a single individual. Both parties will also typically split the costs for their bankruptcy attorney in those instances.

Filing bankruptcy first can also make the divorce a little easier. You’ll already have discharged or otherwise handled most (if not all) of your debts in bankruptcy. It should be much simpler to settle any lingering property disputes that remain in the divorce.

If you or your soon-to-be former spouse opts to declare bankruptcy after the divorce has been finalized, any remaining debt will be placed on the person who first took out those credit cards, loans, or other obligations. Those debts can either be discharged in bankruptcy proceedings or paid off in full by the responsible party.


The divorce decree can definitely come in handy for any debts that remain on joint accounts. These debts should be clearly stated in your judgment of absolute divorce. This document will effectively end a marriage. It should also state which person will be required to pay what debts that may still be unpaid. 

Any applicable child support payments will still need to be paid as well. Bankruptcy will not prevent a person from having to pay child support. This kind of responsibility cannot be discharged. 

Child support payments are usually given priority over other financial responsibilities. They are typically paid before loan payments, and other debts are satisfied. If a substantial amount of child support is owed, it may take a while for those creditors to receive the rightfully due payments.


Can A Divorce Affect My Credit Score?

Filing for divorce itself will not directly affect your credit score. However, divorce and/or bankruptcy can negatively impact your credit score in different ways. Late payments by you or your former spouse can cause your credit score to decrease. Bankruptcies can also hamper your ability to be approved for a home or car loan. Some employers also examine an applicant’s credit history, so it could also result in not being hired or certain positions.

Before you file for divorce, it is important to obtain a copy of your credit report. You can request one for free from any of the three major credit reporting bureaus (Equifax, TransUnion, and Experian). Read your report carefully, and be sure to address any errors found. Any unauthorized charges can also be questioned. 

You or your lawyer should remain in regular contact with your former partner. The lines of communication should always be left open, even if you may not feel like speaking with them anymore. They will need to understand their responsibilities for paying certain debts and ensure that those obligations are fulfilled as promised. 


It is Okay To Ask For Help!

If you have been thinking about filing for divorce, you probably have many questions. You may be wondering what will happen to yourself, your children, and other loved ones. That is perfectly normal.

You can contact us for a free no-obligation consultation. We are here to help. Our trained staff can explain what you can expect and define the steps in the process in simple terms.