Divorce and Debt: Who Pays What After Separation?

Arkansas follows the principle of equitable distribution when dividing assets and debts in a divorce. Under divorce law, equitable distribution does not always mean an equal split. Instead, the court looks at what division would be most fair based on the circumstances. 

While one spouse may leave with more assets, the other may leave with a greater share of the debt, depending on specific factors such as income, earning ability, and contributions to the marriage.

In applying Arkansas divorce law, courts treat marital debt as a jointly shared responsibility. This means that most debt acquired during the marriage is divided, even if the account is only in one spouse’s name. The reasoning is that both parties benefited from the marriage, and financial obligations must be addressed in conjunction with the division of assets.

At James B. Bennett Law Office, I understand that ending a marriage is never just about dividing property and moving forward. For many of my clients in El Dorado, Arkansas, debt becomes one of the most pressing concerns when dealing with divorce law. 

Credit cards, mortgages, medical bills, and personal loans do not simply disappear when a marriage ends, and determining who is responsible for each financial obligation often causes tension. Under Arkansas divorce law, dividing debt is handled much like dividing property, with the court seeking an outcome that is fair to both spouses.

Marital Debt Versus Separate Debt

Under Arkansas divorce law, marital debt encompasses any financial obligations incurred during the marriage, regardless of who signed for them. Separate debt, by contrast, refers to obligations one spouse held before the marriage or debts acquired after separation.

For example, if one spouse took out a student loan before the marriage, that loan may remain the responsibility of that spouse. On the other hand, if a credit card was used throughout the marriage to pay household expenses, that debt will likely be divided as marital debt. Arkansas divorce law requires courts to carefully examine the timing and purpose of each debt before deciding who should pay.

Factors Courts Consider for Dividing Debt

Arkansas divorce law requires the courts to consider several factors when dividing debt. These factors typically include the following.

• The length of the marriage

• Each spouse’s income and earning capacity

• The purpose of the debt and whether it benefited the marriage

• Whether either spouse has separate property or separate debt

• Contributions of each spouse to the marriage, both financial and non-financial

Dividing debt is not automatic. Instead, the courts closely examine the financial situation of both parties before deciding how to allocate debt and financial responsibility.

Credit Card Debt and Divorce Law

Credit card balances are one of the most common sources of dispute. Under Arkansas divorce law, credit card debt is usually considered marital if it was used for household or family purposes. Even if the card was in only one spouse’s name, the court may still view it as a joint responsibility.

However, if one spouse used a credit card for purely personal purchases that did not benefit the marriage, the court may assign that debt solely to the spouse who incurred it. The key issue is whether the debt served the marital household or only individual interests. This distinction highlights how Arkansas divorce law prioritizes fairness over rigid formulas.

Mortgages and Auto Loans

For many couples, the most significant debts involve mortgages or car loans. Under divorce law, courts typically divide both the assets and the liabilities. If one spouse keeps the home or vehicle, that spouse often becomes responsible for the corresponding loan. In some cases, the court may order the sale of the property so that the debt can be paid and the proceeds divided.

Arkansas divorce law requires a realistic evaluation of whether one spouse can afford to keep such assets and service the related debt. If neither spouse can handle the payments alone, the court may determine that selling is the only fair option.

Medical Bills and Other Personal Debts

Medical bills are another area where divorce law plays a significant role. The courts often classify medical debt incurred during the marriage as marital debt, especially if it relates to necessary treatment. However, elective procedures or specific debts taken on without the other spouse’s knowledge may be treated differently.

Personal debts, such as gambling losses or secret loans, are more likely to be assigned solely to the spouse responsible. Arkansas divorce law gives judges discretion to decide whether a debt should be divided or kept separate, based on fairness and the facts of the case.

Debt Division and Spousal Support

In some cases, debt division is tied closely to spousal support. Arkansas divorce law allows courts to consider debt burdens when awarding alimony. If one spouse takes on a disproportionate share of marital debt, the court may consider balancing this with an alimony award. Conversely, if one spouse has little debt and a high income, support obligations may be adjusted accordingly.

This interplay between debt and support highlights how divorce law seeks fairness. The courts do not view debts and assets in isolation but rather as part of the larger financial picture.

Misconceptions About Debt in Divorce

Many people believe that if a debt is in only one spouse’s name, that spouse is solely responsible for it. Under Arkansas divorce law, this is often not true. The courts look at when and why the debt was incurred, not just whose name is on the paperwork.

Another common misunderstanding is that bankruptcy wipes away obligations assigned in a divorce. While bankruptcy may discharge certain debts, divorce decrees remain binding. The courts can hold spouses in contempt for failing to follow orders, even if creditors are no longer pursuing the debt.

How Divorce Impacts Creditors

Creditors are not bound by your divorce decree. Even if the court assigns a particular debt to one spouse under divorce law, the creditor may still pursue both spouses if both names are on the account. This means that if one spouse fails to pay, the other may still face collection efforts.

For this reason, consider refinancing, closing accounts, or paying off certain debts before finalizing your divorce. While Arkansas divorce law can assign responsibility, creditors operate under contract law, and their rights are separate from the divorce proceedings.

Contact an Experienced Attorney Today

Debt is one of the most stressful parts of divorce, but Arkansas divorce law provides tools for addressing it fairly. Without legal guidance, many people agree to arrangements that leave them vulnerable to future financial problems. However, by carefully reviewing debts, contracts, and court factors, you can work toward pursuing outcomes that protect your long-term stability.

From credit card balances to mortgages and medical bills, each type of debt presents unique issues that must be addressed carefully. At James B. Bennett Law Office, I work closely with my clients to help them understand their rights and obligations under divorce law. By providing clarity and advocacy, I make sure that debt division does not undermine their financial future after separation. 

Ending a marriage is difficult enough; carrying an unfair share of debt into the next chapter of life only adds to the burden. With the right legal approach, debt can be divided fairly, allowing both spouses to move forward with greater stability. Located El Dorado, Arkansas, I serve clients throughout the surrounding areas. Contact me today to schedule a consultation.