Cherie Kerr - Divorce and debtBy the time Cherie Kerr and her ex-husband finally went their separate ways, her ex had run up $89,000 in debt during the divorce proceedings alone. She knew that if she didn't take action fast, that debt would scar her financial life forever.

In a way, Kerr knew the marriage was over before it began. Her husband, a home builder, almost immediately asked to borrow $100,000 on Kerr's house to finance his business "and I stupidly agreed," says Kerr, who owns a publicity firm in Santa Ana, Calif.

He said he'd pay her back in six months, but after five years, when the marriage was crumbling -- in large part because Kerr says she didn't trust her husband -- he still hadn't paid her back. He finally managed to do so a few months before the divorce papers were to be signed, and Kerr breathed a huge sigh of relief. Yet, a few weeks later, Kerr learned that her husband had taken out a $150,000 line of credit in both of names and had already spent $89,000 of it."What are you mad about?" her husband asked when confronted with this new development. "There's plenty of money left for you, too."

"I'm not living on borrowed money," protested Kerr, who knew she'd be responsible for paying back that debt. So she spoke with her attorney, who then spoke with her soon-to-be ex-husband.

Luckily for Kerr, her husband managed to pay back the money from the line of credit before they hashed everything out in court.

Kerr barely escaped a financial disaster. Before a divorce is final, the debt your partner incurs during that period is still yours.

"A spouse is and can be held liable in a divorce for the other spouse's debts -- and it doesn't necessarily matter whose name the debt is in," says Richard P. Terbrusch, a matrimonial attorney (nobody seems to call themselves "divorce attorneys" any more) in Danbury, Conn.

So if you've just ended a marriage or are considering calling it quits and wondering what's going to happen to that debt your spouse racked up, it might be helpful to understand a few things.

There Are Two Types of Debt

When it comes to divorce and debt, there are two forms of debt that courts primarily tend to look at: living expenses and community property.

Living expenses are, as you'd imagine, the money you pay for the mortgage or rent, groceries, utilities, your cable or cell phone, and other, similar expenses. Community property is pretty much everything else.

So if you and your spouse owe, say, $3,000 on a credit card that you've been using to pay for groceries, gas and cable, that debt is considered living expense debt. But if the debt you've racked up on your credit card is for gym equipment, a new TV, a freezer-on-top refrigerator -- well, that's community property debt.

Determining the debt you owe begins to get confusing if you have both living expenses and community property expenses on the same credit card. And it gets more complicated if one person had the credit card before the marriage and racked up say, $5,000 in debt on it prior to the marriage, and then during the marriage, both parties added even more debt to it.

At that point, "what debts are separate and what aren't, and what debts you can justifiably say aren't yours is almost impossible," says Bob Nachshin, a matrimonial attorney in Century City, Calif., whose clients have included Will Smith, Rod Stewart, John Ritter and Barry Bonds.

Where You Live Determines Whether You Share That Debt

In community property states, the courts see the debt that's accrued over the course of the marriage as the responsibility of both parties. So if you and your spouse bought a boat for $25,000, and you still owe $20,000 on it, then both parties split that $20,000 debt down the middle.

But what if the husband secretly bought that boat with a credit card that was in his name only and the wife, whose name wasn't on the card, had no clue about its existence? In a community property state, she still owes $10,000.

Likewise, says Terbrusch, "if the wife runs up a credit card in her name alone during the marriage, a portion or all of the debt could be assigned to the husband during the divorce."

Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

If you're living in another state, then how you split your debt is likely done through what's called equitable distribution, in which attorneys and a judge determine who owes what. In other words, if your spouse racked up a lot of credit card debt in secret, you're more likely to come out of your marriage not owing any of that money. But while that makes it sound like community property states belong in the Stone Age, that's not necessarily so.

After all, by splitting everything down the middle, courts are trying to promote the idea that a marriage is an equal partnership, and that if a mom quits her job to stay home and raise the kids while the dad brings home the paychecks, she's entitled to half the assets because she was contributing half her time and energy into keeping the family going. In this case, equitable distribution works to the benefit of both partners.

And while it's different in every state, courts are generally going to take many factors into consideration, from how long the marriage lasted and each person's income during the union to whether either spouse had been wed before, which is relevant if your soon-to-be-ex brought debt to the marriage that was a result of his or her former spouse's out-of-control spending habits.

Lesson to Be Learned

Kerr's experience left her wiser. Her advice for couples in bad marriages: "The minute you split up, or even before you split up, make sure everything is paid for. I know that if I ever got married again, I'd want everything in my name and maybe one joint account, which I'd make sure was buttoned up so we couldn't get into too much trouble. I never want to be that vulnerable again."

If you're saddled with an ex-spouse's debt that's ruining your life, and you don't feel you have any other recourse, there's always the option of bankruptcy. It may be an unappealing option, but since bankruptcy discharges most of what you owe, it does make it possible to divorce a spouse's debt.

And most experts will tell you that if you're going to have to declare bankruptcy, it's better to do it jointly, before you end the marriage -- that's simply because if you're trying to make a clean break, its hard to do so if you're burdened by a large amount of debt that you accumulated during your marriage. While we're not recommending bankruptcy as your first option, if it's clear that it's going to be in the cards, you'd be wise to make it part of the divorce experience, rather than have to deal with it several months later.

And keep in mind that if your partner declares bankruptcy and you don't, you'll be on the hook for all the debt you two accumulated during the marriage. Credit card companies don't care that your ex was a jerk, and that ethically you shouldn't have to pay the $40,000 he or she spent during the years you were married. If your name was on that credit card, the company can come after you for those funds. If your departing spouse declares bankruptcy, that alone may force your hand to declare it as well.

But not all news is bad news.

"Courts are fair," says Naschin, the attorney who has handled a lot of celebrity divorces. Overall, he says, when it comes to deciding whose debt is whose, "most courts aren't jaded and want to do the right thing. And most courts don't want to be reversed in an appeal."

Geoff Williams is a frequent contributor to WalletPop. He is also the co-author of the book Living Well with Bad Credit.

Increase your money and finance knowledge from home

Timing Your Spending

How to pay less by changing when you purchase.

View Course »

Introduction to Preferred Shares

Learn the difference between preferred and common shares.

View Course »

Add a Comment

*0 / 3000 Character Maximum

126 Comments

Filter by:
Lynn Sarto

Hello Everybody,

TESTIMONY ON HOW I GOT A LOAN TO CHANGE THE WRETCH LIFE OF MY FAMILY

My name is Lynn Sato. I live in USA Florida and i am a happy woman today? and i told my self that any lender that rescue my family from our poor situation, i will refer any person that is looking for loan to him, he gave me happiness to me and my family, i was in need of a loan of $250,000.00 to start my life all over as i am a single mother with 3 kids I meant this honest and GOD fearing man loan lender online that help me with a loan of $250,000.00 U.S. Dollar, he is a GOD fearing man, working with a reputable loan company. if you are in need of loan and you are 100% sure to pay back the loan please contact them and please tell them that Mrs Lynn refer you to them.

contact via E_mail: urgentloan.investment@outlook.com
OR
contact via E_mail: onlineloan.finance@outlook.com
contact via Webs: http://loanfunds.webs.com

My personal contact: +1-760-260-9899

21 hours ago Report abuse rate up rate down Reply
Drzizi Temple

the only person that i can bodly say say can solve any relationship problem or any problem at all is this great man called drzizi after i came in contact with him thank you drzizi for restoring my family and my relationship you can contat him through his email @drzizitemple@gmail.com for your problems

Wednesday at 11:57 AM Report abuse rate up rate down Reply
Robert Jack

Here comes an Affordable loan that will change your life for ever, I am Dr. Robert Jack a certified loan lender, I offer loan to individual and public sector that are in need of financial Assistance in a low interest rate of 2%. Bad credit acceptable,The Terms and Conditions are very simple and considerate.You will never regret anything in this loan transaction because i will make you smile. Our company has recorded a lot of breakthroughs in the provision of first class financial services to our clients, especially in the area of Loan syndication and capital provision for individuals and companies. We have brought ailing industries back to life and we back good business ideas by providing funds for their up start. We have a network of Investors that are willing to provide funds of whatever amount to individuals and organizations to start business and operations.i want you to understand the fact that i Dr. Robert Jack is out to help the less financial privilege get back on track by providing all type of loans to them (E.G) mortgages, home loans business loans and bad credit loans commercial loans, start-up- working capital loans, construction loans ,car loans, hotel loans,and student loans, personal loans, Debts Consolidation Loans, what are you waiting for asap why don't you try Dr. Robert Jack Loan home and be free from debts any interested client should contact me asap (dr.robertjackloans@gmail.com)

August 18 2015 at 2:06 PM Report abuse -1 rate up rate down Reply
Julie Garrisson

Hello Everyone, My names are Mrs Julie Garrison, i am from the United States of America, currently living in Texas city.i went in search for a loan on the internet , and the Lord lead me to a genuine loan lender, A Company of AMIGO LOAN FIRM.{amigoloanfirm@yahoo.com}, whom i contacted and requested for a loan amount of $45,000.00 dollars to establish a new business, and to my surprise i got my desired loan within 2 days(48 hours). While searching for a company to get a loan from, i read various testimonies of how people where scammed of their money,and i was scared.I am happy i came in contact with AMIGO LOAN FIRM.so i humbly advice you in search of a genuine loan lender to quickly contact AMIGO LOAN FIRM via email:{amigoloanfirm@yahoo.com} Or Text (402) 923-7572, and you will be as happy as i am.may the good lord bless them and reward them effortlessly for what they have done in my life. Indeed they are the best loan lender...

July 12 2015 at 9:27 AM Report abuse rate up rate down Reply
Carolyn Cochrun

Thank you once again the greet dr okosovo . i want to share my testimony to you all abut mt past life and when i was in pain in my relationship with Marcus who is the father of my kids today now i have a happy home. firstly, before my marriage to Marcos, i was passing so many pain form hi also i try to stop him for womanizing on till now i curt him with one lady who promise him another apartment then i don't no what to do each time my husband come home he dose even want to eat my food sturdily hr hate me that i cannot tell any one abut my husband behavior. on til one day i remember that i have constituted one man called okosovo when i was in university about the gay i was dating then who lift me and not thinking of coming back to me also i was told about the great man how he help people about relationship so i go true my email again and stated searching for his contact that is why i contacted him again so if you are in such pain you can via he on email (drokosovospelltemple@hotmail.com) or you can call him on +2348148447275

July 12 2015 at 8:08 AM Report abuse rate up rate down Reply
Scott Brenda

Hello everyone, My name is Scott Brenda ,a citizen of USA; am 45 years of age..I am married,with three kids I want to inform you all about the goodness of the lord,i was struck in a financial situation,and i needed to pay off my bills,I tried seeking for loans from various loan firms both private and corporate but never with success,and most banks declined my credit. but finally i want to Thank God Almighty for leading me to a real and Legit loan lender named Mrs brandy laufer, the CEO of BrandyLauferInvestmentLimited after been scammed the sum of $10,000 by fake lenders,i was hopeless and didn't know who to trust while she came and put a great smile on my face By lendering me the sum of $450,000.00USD at my greatest surprise,So dear,if you must contact any firm with reference to securing a loan with low interest rate of 2% and better repayment plans and schedule,please contact {Brandylauferinvestmentlimited@hotmail.com} And also if you have been victim of Scam,you should worry no more because,i have brought you good news,and the only lender you can trust,just contact her now via (Brandylauferinvestmentlimited@hotmail.com)for more information on how to get your loan. she does not know am doing this i pray God bless her Abundantly for putting a smile on my face and that of my family.

July 11 2015 at 4:26 AM Report abuse rate up rate down Reply
Casandra Ken

My name is casandra and I live in germany, My life is back again... After 3 years of Broken marriage, my husband left me with kids .I felt like my life was about to end and I almost committed suicide, I was emotionally down for a very long time.Thanks to a spell caster called omonkhoa, his email address: dromonkhoalovespell@outlook.com which I meet online, On one faithful day, as I was browsing through the internet and I came across a lot of testimonies about this particular spell caster.Some people testified that he brought their Ex boyfriend back, some testified that he restores Womb,Cure Cancer and Herpes Virus and HIV Cure other sickness, some testified that he can cast a spell to stop divorce and so on. I also come across one particular testimony and it was about a woman called nancy,she testified about how he brought back her Ex lover in less than 2 days and at the end of her testimony she dropped Dr OMONKHOA mail address: dromonkhoalovespell@outlook.com After reading all these,I decided to give it a try and I contacted him through his via email and explained my problem to him. In just 48 hours, my husband came back to me, and we solved our issues, we are even happier than before Dr OMONHKOA is really a gifted man and I will not stop testifying him because he is a wonderful man and so powerful, If you have a problem and you are looking for a real and genuine spell caster to solve all your problems. contact him on this email:dromonkhoalovespell@outlook.com

July 10 2015 at 12:40 AM Report abuse rate up rate down Reply
Robert Jack

Hello,

Here comes an Affordable loan that will change your life for ever, I am Dr. Robert Jack a certified loan lender, I offer loan to individual and public sector that are in need of financial Assistance in a low interest rate of 2%. Bad credit acceptable,The Terms and Conditions are very simple and considerate.You will never regret anything in this loan transaction because i will make you smile. Our company has recorded a lot of breakthroughs in the provision of first class financial services to our clients, especially in the area of Loan syndication and capital provision for individuals and companies. We have brought ailing industries back to life and we back good business ideas by providing funds for their up start. We have a network of Investors that are willing to provide funds of whatever amount to individuals and organizations to start business and operations.i want you to understand the fact that i Dr. Robert Jack is out to help the less financial privilege get back on track by providing all type of loans to them (E.G) mortgages, home loans business loans and bad credit loans commercial loans, start-up- working capital loans, construction loans ,car loans, hotel loans,and student loans what are you waiting for asap why don't you try Dr. Robert Jack Loan home and be free from debts any interested client should contact me asap (dr.robertjackloans@gmail.com)

June 26 2015 at 12:13 PM Report abuse rate up rate down Reply
Julian Clark

Do you require financial assistance or urgent loan? and you have being disappointed by banks. We can provide direct funding of up to 5 million Euro at convenient interest rates For more information and requirement of application form, Contact us via email uspf.associates@gmail.com or +447087627975
Regards.

June 12 2015 at 11:56 PM Report abuse rate up rate down Reply
Karen Gary

HELLO
my name is Karen Gary from USA, i want to testify to the general public how my relationship was restored back by the great power's of Dr Marvel after three months of loneliness, my ex-lover called me after my contact with Dr Marvel that he want us to come back and start a good home, now we are happily married. All thanks to Dr Marvel for his wonderful spiritual help. You can contact him via email extremespellhome1@gmail.com or call his telephone number +1559 898 2962 if you have similar problem, or any solution you may need.
Good Luck.

May 23 2015 at 10:37 AM Report abuse rate up rate down Reply