Property division is among the most contentious divorce issues. It can make a divorce emotional, long, and legally complex. While most people focus on asset division, debt division is just as important. In some cases, it is even more complex. Since Arizona is a community property state, the law treats marital debt the same way it treats marital assets.
Besides community property laws, debt division in an Arizona divorce also depends on the nature of the debt and under what circumstances it was incurred. Understanding how debt division works, including what the court considers, can help protect your financial future and avoid surprises after the finalization of your divorce.
Understanding Community Property Laws
Arizona is one of the few community states. This means that it considers most assets and debt acquired during a marriage as belonging equally to both spouses, regardless of who acquired them. Consequently, the court often divides these marital assets and debts equally during divorce.
Community property includes most assets and debts a couple acquires during marriage. Essentially, debt accumulated in marriage is community property. This means that if one spouse takes out a loan or uses a credit card during marriage, both may be equally responsible, even if the other spouse was not involved.
Separate property refers to assets and debts acquired before marriage or after legal separation. It can also include debts specifically assigned to one spouse in a prenuptial or postnuptial agreement. However, the spouse claiming separate debt must prove the specific debt as separate, especially when it is contentious.
The Arizona Revised Statutes (A.R.S. 25-211 and 25-318) outline the legal framework of dividing community property and debts in a divorce.
Common Types of Debts in Arizona Divorces
Debt division covers a wide range of financial obligations, including:
- Credit Card Debt – Whether the account is joint or in one spouse’s name, if the debt was incurred for the benefit of the marriage, the law often considers it as community debt.
- Mortgage Debt – The home loan is usually shared responsibility if the property is community property. How it’s divided in divorce depends on whether the home will be sold, refinanced, or awarded to one spouse.
- Auto Loans – If the vehicle is marital property, the related loan will also be considered community debt.
- Medical Bills – Debts from medical treatment during marriage are generally shared, even if only one spouse received the care.
- Business Debt – If one spouse owns a business acquired or operated during marriage, related debts may be shared depending on how the business is classified.
Since different debts have different liability and repayment rules, careful debt analysis is crucial before a divorce settlement.
Factors the Court Considers in Debt Division
Arizona courts aim for fair and equitable division of debts, but equitable doesn’t always mean exactly equal or 50/50. Some of the factors that judges may consider include:
- When the debt was incurred. Debts acquired before marriage or after separation may be assigned to the spouse who incurred them.
- Who benefited from the debt. If one spouse used funds solely for personal, non-marital purposes, the court may assign that debt to them.
- Financial misconduct. If one spouse recklessly spent marital funds, gambled, or took out loans without consent, the court can assign that debt to them.
- Prenuptial or postnuptial agreement. These contracts often pre-determine how debts will be divided.
- Ability to pay. While debt division isn’t solely based on income, the court may consider each spouse’s post-divorce financial situation.
Handling Joint vs. Separate Debts
Joint debts like co-signed loans or joint credit cards are particularly complicated. Even if a divorce decree states that one spouse is responsible for the debt, creditors can still pursue both parties for missed payments. In essence, the creditor’s contract is separate from the divorce judgment.
Divorcing couples can reduce the risk associated with joint debts by refinancing debts into one spouse’s name or paying off joint debts before finalizing the divorce. They can also remove one spouse as an authorized user or joint account holder.
Separate debts are generally assigned to the spouse who incurred them before marriage, after legal separation, or after the divorce process begins. However, proving the debt is separate requires documentation, and the burden of proof is on the one claiming it as separate.
Protecting Your Credit and Financial Interests during Divorce
Divorce involves a financial transition that can negatively affect your credit score, especially if joint accounts remain open. Some of the steps you can take to protect yourself include:
- Monitor your report – Regularly check for new accounts or missed payments that could harm your credit score.
- Close of freeze joint accounts – Prevent new charges and ensure no additional shared debt is incurred.
- Keep detailed records – Save statements, receipts, and agreements that show who is responsible for which debts.
- Negotiate repayment terms – As part of the divorce settlement, decide who will pay each debt and how.
- Set up automatic payments – Avoid late fees and credit damage while the divorce process is ongoing.
These proactive steps can help prevent ongoing financial entanglements long after the divorce is over.
How a Divorce Lawyer Can Help during Debt Division
An experienced Arizona divorce attorney can play a key role in protecting your financial future. They can:
- Evaluate all debt to determine community vs. separate debts.
- Negotiate fair settlements that protect your interests
- Ensure clarity in the divorce decree language to avoid future disputes
- Help enforce debt division orders in case your ex-spouse fails to pay
Legal guidance is especially valuable when debts involve large amounts, complex business interests, or allegations of financial misconduct.
Contact a Tucson Debt Division Attorney
Debt division is a crucial part of any Arizona divorce, and misunderstanding related rules can be costly. As a community property state, Arizona considers most debts acquired during marriage as jointly owned and is to be split equally. However, due to exceptions, special circumstances, and legal agreements, the final debt division in most Arizona divorces is rarely equal or 50/50. Understandably, debt division can be confusing for most people.
If you’re in Tucson, AZ, and are concerned about debt division in your Arizona divorce, we are here for you. Our skilled and experienced Tucson debt division attorneys at Liberty Audette and Associates will ensure fair debt division and help protect your credit score. Contact us today for a consultation and to learn how we can help you navigate property and debt division with confidence.