During property division proceedings, couples must split their resources and debts in a fair manner. For some couples, unexpected information comes to light during the discovery stage of the property division process. For example, one spouse may have opened a credit card during the marriage that the other did not know existed.
What happens to hidden debts during the asset division process?
The nature of the debt influences the outcome
When looking at disagreements related to a hidden credit card that one spouse asserts should be part of the property division process, the nature of the debt is often the deciding factor when a judge decides if the spouses share responsibility for that hidden credit card debt or if one spouse is solely responsible for it.
If financial struggles meant that one spouse needed a new line of credit to pay the electric bill for the family or buy groceries, then the courts may treat the debt as marital. However, if the debt stemmed from the dissipation of marital assets for purposes that undermined the marital relationship, the judge reviewing the case might decide that excluding the debt from the marital estate is the fairest solution.
If one spouse accrued debt due to gambling, adultery or substance abuse, the courts may agree that they should assume sole responsibility for that debt. Debts related to maintaining the households are likely to be the responsibility of both spouses, even if one spouse was not fully honest with the other about their spending habits.
Learning more about equitable distribution rules can help people strategize in the early stages of the property divison process. Those who uncover hidden debts may need to look carefully at the nature of those debts to determine if they may share some responsibility for them.