The process of separating finances can be one of the biggest hurdles for couples preparing for divorce in Arizona. The longer the marriage has lasted, the more intertwined the finances of the spouses will have become. Not only will they share property with each other, but they will likely also have a variety of shared debts. They may share a mortgage and credit cards. One or both of them could have student loans taken on during the marriage.
Those financial obligations can be a very pressing concern as people prepare for divorce in Arizona. What do the community property rules that apply in Arizona divorce mean for the division of marital debt?
Couples may need to share debts from during the marriage
When the Arizona courts review the marital estate, they won’t just look at the income that the spouses earned and the property that they acquired during the marriage. The courts will also look at financial obligations. A credit card account does not necessarily need to be a joint account with both spouses listed as cosigners to be a marital debt. It will likely be the date that someone took on the debt that matters the most for the purpose of debt division, although the intention behind the acquisition of the debt could matter as well.
Debts taken on to diminish the marital estate or in the course of acts that damage the marriage may not end up included in the pool of marital assets and debts. Most debts, however, will be subject to division. judges can handle that division in a variety of different ways depending on the unique financial circumstances of the spouses. One spouse may end up responsible for more debt because they retain more marital assets or to offset other aspects of the overall settlement. The goal is to achieve an appropriate division of those assets in accordance with the community property statutes in Arizona, and the debts people share can play an important role in that process.
Spouses may decide that they want to negotiate their own property division terms during a divorce in part because they want to have more control over what happens with specific debts. Those who resolve their divorces out of court may be able to set their own terms for sharing debts and assets at the end of a marriage. Although these terms may not be binding on the creditors, they will be enforceable between the parties.
Learning about the challenges that couples face during an Arizona divorce may help those preparing to initiate the process better plan for the future.