Debts are the other side of assets and must be dealt with in a divorce. If you cannot agree, then the court will generally consider several factors in dividing debt obligations. Those factors can include:
• Who made the original debt?
• For what purpose was the debt made?
• Who received the benefit of the debt proceeds?
• Who will receive as a part of the division of marital assets the particular asset (if any) connected with the debt?
• Who is better able to pay the debt?
Despite an agreement for one spouse to pay a debt that is in both parties’ names, there can still be problems with the debt. If the party responsible for the debt does not pay the debt, the other party can still be sued for the debt.
For example, the wife gets the house and the husband agrees to pay the mortgage. The husband dies or goes bankrupt. The wife may or may not be able to sue the husband. In any case, the mortgage company can foreclose on the house if the payments go unpaid and sue the wife for any unpaid balance after foreclosure. The best way to protect the wife in this case would be for the husband to refinance the property and to remove the wife from the debt if possible. Sometimes this is financially impossible for large debts such as houses but can still be done with smaller debts such as second mortgages and car notes.