Financial issues often contribute to problems in a marriage. Sometimes, one spouse runs up credit card charges or otherwise incurs significant amounts of debt. If a Nevada marriage ends in divorce (whatever the cause), is a spouse responsible for repayment of debts incurred by the other spouse during marriage? The answer depends on the circumstances.
Nevada is a community property state. Under state law, both spouses jointly own property acquired during a marriage as community property. If the marriage ends, community property typically is equally divided. If a court makes the division, the law requires a fair and equitable distribution, which usually means that the spouses receive equally valued property.
Similarly, debts and liabilities incurred during a marriage are presumptively a community obligation and generally will be divided equally as part of the property distribution in a divorce. However, separate debt incurred by one spouse prior to the marriage may not be the responsibility of the non-borrowing spouse. In addition, debt incurred by one spouse using separate property as collateral may not be the responsibility of the non-borrowing spouse in some circumstances.
If the spouses entered into a prenuptial or premarital agreement, that agreement may address allocation of debt in the event of divorce. In that situation, the provisions of the agreement are likely to determine the division of debt after a divorce.
In a divorce, the parties may be able to negotiate an agreement that addresses the division of property, as well as the debts and liabilities of the spouses jointly or separately after the divorce. When debt is a significant issue, it is critical that the details concerning responsibility for debts after the divorce be included in the property settlement agreement.
Representation by experienced divorce counsel often improves the chances of reaching an agreement that resolves property and debt issues. As long as the spouses reach a property agreement that is reasonable, the court likely will accept the terms of the agreement in granting the divorce. If the spouses cannot reach agreement, the court will divide the property as well as the debts and liabilities as part of the divorce proceeding.
If spouses cannot agree on property division and debt allocation, the court decides disposition of the marital assets and liabilities as part of the divorce proceeding. Under state law, asset allocation generally will be equal in the absence of a party presenting compelling evidence supporting an unequal division. However, Nevada courts do not necessarily follow the same rule in allocating marital debt.
Nevada court decisions have upheld unequal division of debt in a number of different circumstances. For example, a decision of the Nevada Supreme Court upheld a lower court decision allocating debt based on which spouse had an apparently higher future income and thus a greater ability to pay the debt. However, that decision does not mean that a Nevada divorce judge would make the same kind of debt allocation in another case. In any specific divorce action, the court has some flexibility in dividing liabilities and debt between the spouses.
A spouse seeking to avoid responsibility for debts of another spouse has the burden of presenting evidence to the court in support of that position. In these circumstances, representation by a knowledgeable divorce lawyer is essential. An experienced divorce attorney knows what type of evidence is required and also understands the court processes and procedures for providing that evidence to the judge.
Property and asset division and debt allocation often are some of the most difficult issues to resolve in a divorce. While the provisions of Nevada statutes relating to asset distribution are relatively clear (although sometimes challenging even for a court to apply), there are no specific statutory rules relating to debt division in a divorce. Previous court decisions seem to indicate that a judge has discretion when it comes to allocating debt.
If you face a Nevada divorce with potential issues over property and debts, your best strategy is to talk with an experienced divorce attorney as early in the process as you feel comfortable doing so. Your attorney will explain the laws about divorce and property/debt division, analyze your circumstances, and discuss possible options for resolving all the issues that may arise if you pursue a divorce.
When a lawyer assists with your divorce, you and your lawyer will work together to develop a strategy for moving forward. With a skillful attorney by your side, you will be able to navigate through the process with full confidence that your attorney is protecting all your interests and rights.
If you are considering a divorce or legal separation and have concerns about property division and debt allocation, Las Vegas family law attorney Joseph Gersten is here to help. He approaches all domestic matters with understanding and compassion. Attorney Gersten draws on his extensive experience in domestic matters and litigation to protect your interests and pursue efficient, cost-effective resolution of all issues.
Attorney Joseph Gersten works with clients on a broad range of issues in Las Vegas, Henderson, and elsewhere in Clark County. Your initial consultation is always free-of-charge at The Gersten Law Firm. Call 702.857.8777 or complete our online form to schedule an appointment.