Arizona Divorce Debt
Divorce is a difficult process, especially when it comes to dividing property and debts. If you live in Arizona and you’re going through a divorce, it’s important to understand how Arizona divorce law handles debt division.
When it comes to dividing debt, Arizona is a community property state. This means that all assets and debts acquired during the marriage are considered to be owned equally by both spouses, regardless of whose name is on the account or who incurred the debt.
Types of Debt
Before you can divide debt, it’s important to understand the types of debt that exist. There are two main types of debt: secured and unsecured.
Secured debt is debt that is backed by collateral, such as a car or a house. If the borrower fails to make payments, the lender can repossess the collateral. Unsecured debt, on the other hand, is not backed by collateral.
How Debt is Divided
When it comes to dividing debt, there are a few steps that need to be taken:
Make a list of all debts. This includes credit card debt, car loans, mortgages, and any other debts that you and your spouse have incurred during the marriage.
Determine which debts are community property. As mentioned earlier, all debts incurred during the marriage are considered to be owned equally by both spouses. However, if one spouse incurred debt before the marriage, that debt is considered to be separate property.
Decide how to divide the debt. Typically, debt is divided equally between spouses. However, if one spouse earns significantly more than the other, the debt may be divided proportionally based on each spouse’s income.
Work out a payment plan. Once the debt is divided, it’s important to work out a payment plan. This should include who will be responsible for paying each debt and how much they will pay.
Close joint accounts. If you and your spouse have joint accounts, it’s important to close them as soon as possible. This will prevent your spouse from incurring more debt that you may be responsible for.
In some cases, one or both spouses may decide to file for bankruptcy after a divorce. If this happens, it’s important to understand how bankruptcy affects debt division.
If one spouse files for bankruptcy, the other spouse may still be responsible for the debt. This is because bankruptcy only discharges the debt for the person who filed, not for any other parties who may be responsible for the debt.
Dividing debt during a divorce can be a difficult process. However, by understanding Arizona divorce law and the types of debt that exist, you can make the process a little easier. Remember to make a list of all debts, determine which debts are community property, and work out a payment plan. And if you’re considering bankruptcy, be sure to consult with a bankruptcy attorney to understand how it may affect your debt division.
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