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How do Minnesota courts divide debt in a divorce?

On Behalf of | Apr 25, 2023 | Family Law

Minnesota’s equitable distribution model aims to divide marital property in a manner that is fair to both parties. Courts treat the division of debt similarly to the division of assets.

Here are a couple of important considerations about how courts deal with debt in Minnesota divorce proceedings.

Why would a court rule that spouses have to pay one another’s debts?

Outstanding obligations such as credit card debt may be divisible between spouses if the purchases benefit both of them. For example, if one party used a credit card to buy household appliances or electronics that both parties used, a judge may determine that they should both share the obligation. The fact that a person charged a purchase to his or her individual account rather than a joint account does not necessarily mean that the debt will be the account holder’s sole responsibility.

When do courts usually exclude debts from distribution?

Courts typically do not assign shared responsibility for debts that individual spouses incurred while making purchases for their exclusive use and benefit, particularly if they concealed those purchases from their spouse. For instance, a court probably would not divide a charge balance that parties accrued shopping for high-priced, designer clothing or buying lavish gifts for someone with whom they were having an extramarital affair.

Ultimately, it may be advantageous for divorcing spouses to work towards a mutual agreement about how they will divide their debts. Negotiating a compromise could be preferable to litigating the matter and leaving all of the decision-making up to a third party.