If you are considering a divorce, you may want to know if you are responsible for a spouse’s debts.
Equitable Division in Missouri
In general, Missouri is not a community property state. It is, however, an equitable property state. Property is to be divided equitably. Under the law, though, debts are considered negative assets, which means that they will be divided equitably as well.
The rationale behind this is simple. Many married couples have joint property that has required joint debt. If you have a house with a mortgage, for example, the mortgage is debt secured by the house. A car loan may be backed by the car. If you plan to sell these assets and divide the proceeds, the debt for each loan will be divided along the same lines as the proceeds.
Credit card debt, if it is held in both your names, is also usually divided equitably. If, on the other hand, it is in your spouse’s name only, you may not be responsible for the debt. Personal loans, if obtained from a bank where you had joint accounts, are likely to be distributed equitably. But if your spouse has obtained a personal loan only in their name, you may not be responsible.
If you co-signed on a credit card or any type of loan, though, you will be legally responsible.
Prudent Moves to Take
If you are concerned that a spouse may go on a spending spree before the divorce is final, it’s a prudent move to close any co-signed or joint credit card or bank accounts. Open a credit card or bank account in your own name.
It’s also a good idea to try to pay off any jointly held credit card or personal loan debt before the divorce is final. It makes both financial settlement and any psychological issues surrounding property in common much easier.
If you have any questions about separation or divorce in Missouri, contact us.