Are you responsible if your spouse maxes out the credit cards after you are separated?
Probably not. See below!
Debt division in divorce
Much like the distribution of assets in a divorce, unfortunately debts also have to be distributed between the divorcing parties. Because Missouri is what is called an “equitable distribution” state, all marital assets are divided in a fair “equitable” (but not necessarily equal) way. In contrast to equitable distribution, some states employ “community property” where all property (and debt) accumulated during the marriage is divided equally. We are lucky Missouri is not a community property state.
When a Missouri court decides which debt should be assigned to which spouse, the court first must distinguish between marital debt and separate debt. When debts and liabilities are incurred during the marriage they are typically classified as marital debt, even if only one of the spouses is listed as legally responsible for the debt when it was incurred. Marital debt is typically split evenly between the spouses. Marital debt may include credit card debt, mortgages or car loans assumed during the marriage.
Separate debt, on the other hand, is debt established either before the marriage or incurred after the spouses were separated. Missouri courts may mandate that separate debts are the responsibility of the spouse who incurred the debt. So no, if your ex goes and maxes out the joint credit cards following the separation, you are not in most instances responsible for that debt.
How is marital debt and separate debt distinguished?
Well, in Missouri the court will consider several factors when it comes to classifying a divorcing couple’s debt as marital or separate.
Which spouse was responsible for responsible for taking out the debt; and what exactly was the debt for? Was the debt to finance Dad’s gambling habit/fishing boat, or Mom’s facelift/breast augmentation? Whether the debt was incurred for personal reasons or for the benefit of the family will play a large role in determining whether the court classifies the debt as marital debt or separate debt.
Courts also have to consider which party has the financial ability to pay off the debt. Under the doctrine of equitable distribution, marital debt will be divided fairly, but not necessarily equally.
How the marital assets were divided can also have a significant influence on how courts will divide the debt. For example, if one spouse keeps the marital residence/home, then that spouse is more likely to be assigned the mortgage to the property under the doctrine of equitable distribution.
If one party to the divorce is found to have “wasted” money by unnecessary and irresponsible spending funds, this also can be considered when a court determines who to saddle the debt with.
Each spouses ability to pay the debt is also taken into consideration. Sometimes the higher earner will be assigned more of the debt.
Who decides how debt should be distributed?
Like many aspects of a Missouri divorce, most issues are ultimately settled by the parties of the marriage prior to a trial. To aid in coming to a fair settlement, many court jurisdictions require divorcing couples to attend mediation. Mediation is a meeting (usually two hours) between the parties and a neutral mediator (usually an experienced family law attorney). If the parties cannot come to an agreement regarding the debt distribution or other issues, the judge will ultimately decide everything in a bench trial, or a trial in front of the judge. Family law trials are decided by a judge rather than a jury.
What is the legal process by which debt it distributed by courts in Missouri?
Mediation
If the divorcing couple is unable to come to an agreement regarding who will be responsible for the debt incurred during the marriage, the judge may end up deciding for them. However, most courts require the parties to attend mediation before a court will allow the dispute to proceed to trial.
Mediation is a conference with the parties (and often the attorneys representing the parties) with a neutral party who has experience in assisting divorcing couples in coming to an agreement regarding disputed issues prior to trial. Usually a mediator in a custody or divorce dispute is an experienced family law attorney with significant experience in the local courts with the local judges. In this way, the mediator can give the parties an idea of what the judges might decide.
Most courts require a two hour mediation session. The mediation may take place at the mediator’s office or virtually. Typically each party’s attorneys will suggest several mediators they are familiar with in an attempt to agree on a specific mediator. If an agreement regarding the mediator cannot be made, the judge will decide on the mediator.
It is important to note that mediation in divorce and family law issues is not binding. This means nothing decided in mediation is final until the judge approves it. So either party has the right to change their mind if they agreed to a resolution in mediation. Also, the mediator has no power to decide anything and most courts will not even consider what was discussed in mediation.
Judge will decide who gets the debt
If the couple cannot agree, and mediation is not successful in resolving the dispute, the court will decide based on the above factors. It is often beneficial to resolve things prior to a trial by the judge. Trials are expensive and the judge then controls what happens to the marital assets and debts, and the parties have no say.
Other considerations
If your divorce dispute has reached the point of mediation you really should be represented by an attorney experienced in family law issues such as divorce. A mediation is a negotiation and you need to prepare prior to the meeting. You need to have an idea what you want ideally and what is least you will agree to.
Creditors rights
Despite what is ultimately decided in a divorce judgment, creditors do not have to follow the divorce decree. If both spouse's names are listed on the debt, then the creditor has the right to pursue the debt against both parties. It would then be up to the spouse who was not assigned the debt in the judgment to take legal action against the other party who has been ordered to legally assume the debt.
Conclusion
The division and distribution of debt in a divorce in Missouri involves complicated issues. It is recommended to consult with a family law attorney, experienced in asset and debt distribution to ensure your rights and assets are protected to the fullest extent of the law. Attorney Rob Davis at the Men's Center for Domestic Resolution is dedicated to helping men struggling with asset and debt division in a divorce. Please give us a call at (816) 287 1530 for an in person or virtual initial consultation so we can show you how we can help you through this.
Your's truly,
Rob Davis, DDS, Attorney at Law
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