In many divorce cases, divorcing couples will have to go through the legal process of splitting up assets and debts. Every state handles this process differently. Some states are common law states that require a 50/50 division of marital property. Other states are equitable distribution states, where the laws in that state provide a list of factors, which are to be considered when dividing marital property in order to accomplish a fair distribution between both spouses. When is comes to divorce in PA, equitable distribution practices are used in which a judge will look at all of the marital property and decide what he or she feels is a fair distribution based on factors such as the length of the marriage, the ages and incomes of both parties, and the standard of living establishing during the marriage.

It’s easy to comprehend the idea that the physical property, real estate, bank accounts, and other marital property owned by you and spouse will be split fairly when your divorce is finalized. However, what you may not consider is how you and your spouse’s marital debt will be handled during your divorce.

Marital Property and Marital Debt

At its core, in Pennsylvania, marital property includes all property acquired by either spouse during the marriage and prior to the date of separation.  Marital property also includes the increase in value of any non-marital property during the marriage. For example, this may include an asset that one of the parties owned before the marriage such as a 401(k). The laws surrounding equitable distribution in Pennsylvania provide a number of exclusions to the general definition of marital property, but for the most part, any property that both parties to a marriage have benefited from is considered marital property.

Marital property also includes debts incurred by either spouse after the date of marriage and before the date of separation. Typically, marital debt includes items such as mortgages, loans, credit card balances, and tax obligations.  Even if your spouse was the one who racked up a large amount of credit card debt during the marriage, both of you will be liable for the payments, regardless of whose name is on the credit card account.  While this may not seem fair, it is the reality of how property is divided during a divorce in PA.

How is Marital Debt Divided?

While rare, some creditors may allow the transfer of a debt from both spouses to one spouse. Creditors generally do not want to lower the number of potential debtors from 2 to 1, simply because keeping both spouses named allows them to initiate collection actions on either or both spouses.  However, it is possible. For example, while a mortgage loan names both you and your spouse as responsible parties, a mortgage company may allow you to re-finance the loan or obtain a new loan in your name.  This would remove the legal obligation of your spouse to repay the loan.

Even if a debt cannot be transferred to the name of one spouse, the debt is still part of the equitable distribution process. When marital debt is equitably divided by the Court, you and your spouse will be instructed to pay a certain portion of any debts and it is assumed that you both will do so.  As with any other asset subject to the equitable division law, a Judge will look to the amount of the debt, how and when it was incurred, and applies a number of factors in determining how much each spouse will be responsible for.

Pennsylvania Courts are frequently deciding divorce cases that involve substantial debts, whether it be mortgages on real estate or credit card debts incurred during the marriage.  Because equitable distribution is somewhat of a subjective standard, every court decision is important for family law attorneys.  These decisions give us insight into how courts are looking at debt and provide us with a level of confidence when making legal arguments or settlement negotiations. For example, in the 2013 case of Marcy L. Campbell v. Jay M. Campbell, the Superior Court affirmed the lower court’s decision regarding how each spouse was to pay the substantial credit card debt incurred during the marriage.

Marcy L. Campbell v. Jay M. Campbell

Marcy and Jay Campbell were married in 1997 and, following a 2-day hearing; a divorce order was entered on January 31, 2013.  As part of the divorce, the Court determined that Ms. Campbell had paid $14,500 towards the marital credit card debt and ordered Mr. Campbell to pay $7,250 to Ms. Campbell for his share of the debt.

While Mr. Campbell argued that the majority of the debt was incurred by his wife and that he was unaware of the debt, the Court still ordered him to pay one-half of the debt, primarily based upon Ms. Campbell’s testimony that the credit cards were used for everyday items and were used by both spouses.  The Superior Court was clear in its decision that Mr. Campbell was just as responsible for the debt as Ms. Campbell was. While the Court did state that “just because a debt is deemed marital, it need not be divided between the parties,” every case is different.  In this case, the Court chose to apportion the debt equally between the parties based on the evidence submitted and the credible testimony of Ms. Campbell.

What Does this Mean for My Divorce in PA?

As mentioned above, The Superior Court’s decision in Campbell provides attorneys with a unique perspective on how debts are practically handled by courts.  A debt is not always split 50/50 between spouses and, as you can see, the equitable distribution of debt is determined on a case-by-case basis. For this reason, and countless others, it is always advisable to consult with and hire an experienced divorce lawyer to ensure that your debts and other marital property are properly divided and to ensure your rights are fully protected when going through a divorce. Settlements can then be made for both parties to ensure everything is being paid accordingly.