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What happens to debts in a divorce?

On Behalf of | Jan 15, 2024 | Marital Property Division

Divorce marks the end of a marriage and signifies a complex process of dividing assets and debts accumulated during the marriage. Understanding how debts are handled during a divorce is crucial in Washington State, as the state’s laws and guidelines play a significant role in this division.

Washington is one of the few states in the U.S. that follows the community property principle. Under this system, most assets and debts acquired during the marriage are considered community property and are subject to division upon divorce. This includes physical property and financial assets and debts like credit card balances, loans and mortgages that were accumulated during the marriage.

Division of debts

The general rule in Washington is that debts incurred during the marriage are the joint responsibility of both spouses and are divided during divorce. This division is typically based on a 50/50 split.

Debts incurred by either spouse before the marriage or after separation are typically considered separate debts and are usually the responsibility of the individual who incurred them. There can be exceptions, mainly if the debt was used to benefit the marriage or the other spouse.

Impact on credit scores

It’s essential to consider the impact of divorce on credit scores. Joint accounts and co-signed loans remain the responsibility of both parties until they are paid off or refinanced. Failure by one party to pay their share can negatively affect both individuals’ credit scores.

Negotiating debt division

Couples can negotiate the division of their debts outside of court. They can agree on who will pay specific debts and may choose to divide them differently from what a court might decide. These agreements can be formalized in a marital settlement agreement and become legally binding once approved by the court.