How are debt and other liabilities and obligations divided?
Debt division is considered part of the property division process. In community property states, liabilities, like assets, that are brought into the marriage belong to the spouse who incurred them. In equitable distribution of property states, the debt, like the property, is divided equitably between the parties. If the debt is secured debt, the general rule is that the value of the encumbered asset is reduced by the amount of the debt in determining division. For instance, this often happens in the case of family cars. For many divorcing couples, each spouse has a vehicle, but one may be a paid-for clunker worth relatively little with no car payment. The other may be a late model car worth well over $10,000, but with a loan balance equal to its present value. Despite the fact that the vehicles may have very different gross values, the net value for them is equal. A very common problem for couples in our current economy is that they have accumulated high amounts of unsecured debt, with
