Property and Debts in a Divorce
by: Legal Aid Services of Oregon
CONTENTS
How is property divided in a divorce?
What kind of property is divided in a divorce?
How is property divided if the couple is not married?
After the divorce, who is responsible for debts both spouses took on during the marriage?
After the divorce, who is responsible for the debts that my spouse signed for alone while we were married?
What can I do if my ex-spouse does not pay the bills as ordered in the divorce judgment?
How will divorce affect my taxes?
How is property divided in a divorce?
You and your spouse can agree on the division of property and debts. The judge will probably make your agreement part of the divorce judgment. If you do not agree, the judge will divide property and consider many factors such as:
• Where the property came from (gift, inheritance, purchase);
• If one spouse owned it before the marriage;
• If the spouses kept their money in joint bank accounts;
• How much money each spouse is making now and is expected to make in the future;
• Whether it would make sense for a specific item to go to the parent with custody.
The law assumes that a spouse who cared for the couple's home and children has an equal right to have the property that the couple bought or was given during the marriage. This "equal right" rule also applies to the increased value of assets that were owned before the marriage. But one spouse can try to convince the judge that there are good reasons not to follow this rule in your case.
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What kind of property is divided in a divorce?
Unless the spouses agree on what property is to be divided, the judge will divide all of the property that the couple owns -- any land or houses, motor vehicles, home furnishings, money in bank accounts, stocks and bonds, pensions and retirement benefits, lawsuit settlements, etc. The judge can even divide property owned by a spouse before the marriage, but usually it is given to that spouse. The judge also decides which spouse should pay which debts. You should get a lawyer if retirement benefits, pensions, or real property (land or a house) will be issues in your divorce case.
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How is property divided if the couple is not married?
If you and your former partner do not agree on how to divide your property, you will almost certainly need an attorney, and a lawsuit could be needed. It is a good idea for unmarried couples to have a written agreement about property at the time they begin living together.
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After the divorce, who is responsible for debts both spouses took on during the marriage?
The divorce judgment will probably state which spouse should pay the debt. But you both are responsible for making sure that the creditor gets paid. When you made the purchase you both agreed to pay, and a divorce judgment does not change the creditor's right to expect payment from both of you.
If the bill is not paid, a creditor can ask for payment from both spouses. The creditor can also file a lawsuit against either one or both of you for the unpaid bill.
Click here for information about the right to get reimbursement by the spouse who was ordered to pay.
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After the divorce, who is responsible for the debts that my spouse signed for alone while we were married?
The divorce judgment will probably state which spouse should pay the debt. But if the spouses were living together when one spouse made the purchase, the other spouse is usually also responsible to the creditor and could be sued, too. The exceptions are for business expenses and loans of money.
If the spouses were separated when one spouse signed for the debt, the other spouse is not responsible to the creditor unless the debt is for the children's education, health, or support needs.
Click here for information about the right to get reimbursement by the spouse who was ordered to pay.
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What can I do if my ex-spouse does not pay the bills as ordered in the divorce judgment?
You can tell the creditor that your ex-spouse was ordered to pay in the divorce judgment. You can also give the creditor information about how to find your ex-spouse. In many cases, especially if your ex-spouse has more money than you do, the creditor will first try to get payment from the spouse who was ordered to pay the bill in the divorce. If you pay the bill or if the creditor brings a lawsuit against you, you have the right to take your ex-spouse to court so you can get reimbursed (paid back) for the money you paid.
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How will divorce affect my taxes?
Child Support: You do not have to pay taxes on child support payments you get and you cannot deduct child support payments you make.
Exemptions: For recent divorce and custody cases, the parent who has legal custody has the right to claim the child as a dependent for tax purposes, but can sign a form to give the other parent this right. For older cases, the rules are different. For more information about exemptions you should talk to a lawyer or call the IRS.
Spousal Support: You have to pay taxes on spousal support payments you get and you can deduct spousal support payments you make. The Internal Revenue Service has special rules about what payments qualify as spousal support for tax purposes.
Property Transfers: There are special tax rules about property transfers. For information about taxes, you can talk to a lawyer, accountant, tax preparer, or the IRS Taxpayer Information Service listed in your phone book.
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