Divorce, property and debts

One of the challenges in ending your marriage is how to divide up the things that you have acquired together. This includes not only physical belongings, but financial assets, property and debts. 

Property and debt in dissolution

When you submit your dissolution paperwork to the court, you will include a separation agreement that includes your agreed plan for how you will split up all of your property and debts. 

You both have to completely agree with the plan that you submit and agree that you think that it is "fair and equitable." "Fair and equitable" does not necessarily mean that you split everything 50/50. It simply means that looking at the whole picture of how your property, debts and assets will be divided, it seems fair based on your situation. 

Think through these questions when deciding if the agreement is “fair and equitable.” 

• What did you and your spouse have or bring with you into the marriage (debts and assets)?
• How long were you married?
• What debt or assets are you each taking with you at the end of your marriage?

Property and debt in divorce

When you file for dissolution, you will need to do 2 things:

• List all your property and debts. This information will be entered into the financial paperwork that you need to fill out as part of the divorce papers.
• Decide what you have to divide right away. It can take 4 to 12 months or more to finalize your divorce. What will each of you need to get you through that time frame? You can request what you need in the short term through “temporary orders.” 

The permanent, long-term division of property will be handled by the divorce settlement itself. You can decide how to divide these up while the divorce is in progress.

Thinking through your property

List what you and your spouse own or rent. Think through: 

• Your house or apartment
• Bank accounts
• Furniture
• Cars and other vehicles
• Life insurance 
• Business interests, stocks or bonds 
• Pension or retirement accounts
• Anything else you own 

For any of these things that you own, you will need to determine what’s called the “Fair Market Value.” This is how much you could sell it for now, at a yard sale or online. For house or land values, you are required to give the "legal description" along with your fair market value. You can contact your realtor or county recorder and county auditor's offices for these pieces of information.

Thinking through your debts and monthly payments

Debt is money that you need to pay for something you already bought. For instance, this might be payments on your credit card, car payments or loans for things like a TV. 

What debts do you and your spouse have? One kind of debt is a "secured loan." A secured loan is backed up by something of value, or “collateral,” that you own. Usually it’s a piece of property or a car. If you stop making payments, the creditor can use it to help pay off the loan. Consider:

• Short-term loans secured by your car 
• A second mortgage or home equity line 
• Rent-to-own furniture
• A loan where you used your first car as collateral for buying a second vehicle

What about unsecured loans? A loan is “unsecured” because if you stop making payments, the creditor can’t easily take any of your property. They would have to take you to court first. These can include:

• Credit card debt
• Cash advances
• Medical bills
• School loans

Also consider the things you're committed to paying, such as your cell phone plan or your rent.

What is yours and what is “marital?”

The things that you and your spouse own together, or that either of you bought during the marriage, are assumed to be “marital property” — or shared property of the marriage itself. This is true even if you had separate accounts or if one of you made more money than the other. This is also true of debts — if whatever brought on a debt happened while you were married, then most likely you’re both responsible for it. It doesn’t matter whose name is on the bill or credit card. 

But you might own things that are “separate property.” These are things you owned before you were married. You don’t need to split separate property with your spouse when you get divorced. The same is sometimes true of an inheritance, even if you received it during the marriage. 

One piece of property might be partly “marital” and partly "separate." For example, if your spouse put a down payment of $500 on a car right before you got married, and then has been making car payments of $100 per month since, $500 worth of the car is "separate" property. If you renovated a house together, but you owned the house prior to the marriage, that house would also be part "marital property" and part "separate property." In both cases, you would need to subtract out the value of the "separate" part before you divide everything else.

Short-term plans and temporary orders in divorce

Your divorce can take 4 to 12 months, or longer, to work its way through the court process. You can choose to file a request for temporary orders to determine how things will be divided before the divorce is finalized.

When considering filing for temporary orders, think through questions like:

• Do you need to live in the home where you both lived together? 
• Do you need to have the car?
• Do you need access to the credit card? 
• Who will pay the bills for debts and living expenses?

Even if your name isn’t on a bill, or if you don’t have possession of the property or item, don’t assume you won’t be held responsible. For example, you may be held accountable for your spouse’s medical expenses. Or you could be sued if your spouse doesn't make the payments on a car they bought while you were married — even if your spouse has the car now and you have never driven it.

It can be useful to sit down with your spouse and try to agree on who will get what and pay what in the short term. Then you can file a single set of requests for temporary orders. If you can’t agree, you can file separate requests for temporary orders. Then the court will review your requests and make a decision. 

Learn more about filing for dissolution, filing for a divorce without children or filing for a divorce with children.