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If you are considering divorce in Maryland, you might wonder how you and your spouse’s debts will be divided. Debts can include things like student loans, credit card debts, and other miscellaneous debts that you may have incurred during the marriage. This concern is reasonable because you don’t want to end up paying off debts you didn’t incur after a costly divorce. Each state has its own method for dividing property and debts, but in Maryland, the court divides debts equitably. However, it is essential to note here that equitably does not necessarily mean equally.
This is an important distinction because if one person makes more money than the other, it would not be “equitable” to make each individual pay the same amount of the debt, even if that would be “equal.”
Before diving into how the division of property and debts works in Maryland, it is crucial to address what exactly divorce is in Maryland.
What Is Divorce in Maryland?
Maryland state laws dictate that marriage is a civil contract between two individuals. Divorce is the legal ending of that contract ordered by a court. In Maryland, there are two different types of divorces. These are absolute divorce and limited divorce. Both types of divorce require a specific reason or ground for the court to grant it. Typically, divorce and other family law cases are held in a circuit court.
Grounds fall into two categories as well. These categories are “no-fault” and “fault.” No-fault grounds are when neither spouse is accused of misconduct, while fault grounds are when one spouse is blamed for causing the divorce.
What is an Absolute Divorce in Maryland?
An absolute divorce permanently dissolves a marriage. When most people think of divorce, they are likely thinking about absolute divorce.
An acceptable complaint for absolute divorce could be one or any combination of these acceptable grounds:
- One-year separation
- Mutual consent
- Adultery
- Desertion
- Cruel treatment or excessively vicious conduct
- Incarceration
- Insanity
After a decree of absolute divorce is entered, either or both of the divorcees can remarry. This decree may also include all decisions about alimony, child custody, and support.
What is a Limited Divorce in Maryland?
Limited divorce, also known as legal separation, means that a married couple is separated. This type of divorce does not permanently terminate the marriage; the couple remains legally married but lives apart.
During a limited divorce, neither spouse may remarry or have sexual relations with any other person. If they do, that spouse has committed adultery.
Acceptable grounds for limited divorce are:
- Separation
- Desertion
- Cruel treatment or excessively vicious conduct
You do not need a limited divorce to obtain an absolute divorce, but some courts might grant a limited divorce while a couple is seeking an absolute divorce. Limited divorce can also cover temporary decisions regarding alimony, possession of the property, and child custody and support.
Maryland Is an Equitable Property State
There are two types of property division in the United States. Different states may also have different residency requirements that apply to property distribution. States can make their own rules regarding the division of marital property during a divorce, and each state falls into one of two categories. Equitable property distribution is the more significant and common approach to dividing property, while community property distribution is less common.
Keep in mind that a prenuptial or postnuptial agreement will affect how property and assets are divided in a divorce.
What is an equitable property state? According to family law expert Terry Price at the University of Washington School of Law, an equitable distribution state classifies properties as the possessions of the individual who purchased them. The property is classified as a shared property only if the spouse to whom it belongs decides to share it. The only time all property is gathered into a single ‘shared property’ category is when a couple is divorcing and dividing their properties.
It is important to note that a divorce that is taking place in an equitable property state does not have to result in a 50/50 division of property. Frequently, two-thirds of the property will go to the spouse who earns a higher wage in equitable distribution states.
In Maryland, the court will divide your properties in a just and equitable manner, which might result in a 40-60 distribution.
What is a community property state?
In a community property, state assets and properties belong to both spouses. There is no separate property based on who purchased it. Division of property in community property states is also always 50/50 because both spouses share all property.
What Are the Types of Properties in Maryland?
When dividing properties during a divorce, it is crucial to understand what types of properties you are dealing with. The first thing to remember here is that Maryland, like many other states, is an equitable property state. This means that property does not need to be divided equally, as it would in a community property state.
What are the different types of property?
Marital Property
The first type of property is marital property. Marital property is any property acquired during the marriage. It does not matter who paid for this property.
There are a few exceptions to this rule, such as:
- If the property was a gift to a spouse.
- If the property was an inheritance from a third party.
- If the property was excluded from marital property by a valid agreement.
None of these properties are considered marital property. Marital property can generally include anything from bank accounts, stocks, furniture, real estate, retirement accounts, cars, and personal property.
Non-Marital Property
Non-marital property is property acquired before the marriage. For example, if your spouse had a car before you married, they will keep that car after the divorce because it is their non-marital property, not yours.
Any non-marital property stays the property of the individual to whom it belongs unless they title or gift it to their spouse. Realize, however, that you must be able to prove that a piece of property is yours alone if you want it to count as non-marital property in a divorce. Non-marital property remains protected from any debts that the other spouse may have.
Mixed
Some situations may classify a property as partially marital and partially non-marital. These situations can get confusing and difficult to navigate, which is why it can be helpful to have a divorce lawyer to help you understand what you can and cannot claim.
An example of a mixed property situation is when one spouse owned a home before marriage, but the mortgage was paid using marital funds. Mixed properties can be confusing and in reality, the court will often determine what is and is not marital property if there is confusion.
For example, in Harper v. Harper, 294 Md. 54, the court ruled that property that was purchased and paid in part before marriage and then paid in part after marriage was marital property. Additionally, the residence built on that property during the marriage is also marital property.
How Is Responsibility for Debt Assigned in Maryland?
The truth is that the division of debt can be even more complicated than the division of property. This is because debt is much less tangible than a piece of furniture, for example. In Maryland, if the court considers the debt shared, it will divide it equitably between spouses. A shared debt would cover any debts incurred to acquire marital property, such as car loans or mortgages.
Remember, equitable distribution does not mean equal distribution, and it is possible that one spouse will end up with much more debt than the other based on the amount of money they make. As mentioned before, the division of debts can be extremely challenging, and it can help to have a trusted and experienced divorce lawyer that can help you navigate these processes.
Are You Responsible for Your Spouse’s Debt Once You Are Divorced?
Generally, you will not be responsible for your spouse’s debt even after divorce. There are, of course, exceptions to this generalization.
For example, if you agree to be personally liable for your spouse’s debt by cosigning on a loan, you will be responsible for it. A good general rule is that if your name appears on the paperwork, you will be at least partially responsible for the debt.
You are not responsible for your spouse’s debt in the following cases:
- If you have not signed an agreement that notes you as personally accountable for a debt.
- You incurred the debt before your marriage.
- You incurred the debt after your divorce.
- You can prove fraudulent activity.
Divorce with a Plan: Guiding You Through Marital Debt Division
Take charge of your financial future during divorce proceedings with the help of our experienced attorneys at Divorce With a Plan. We understand the complexities of marital debt, ensuring you navigate the process with confidence and avoid undue stress and overpayment.
Don’t face these challenging situations alone, especially when dealing with complex marital debt issues. Let our knowledgeable divorce attorneys guide you through the intricate processes, drawing upon their in-depth understanding of Maryland’s property distribution laws and regulations.
Divorces can be complex, but with our support, you won’t need to worry about the legal intricacies. Contact a Maryland divorce lawyer at Divorce With A Plan today to achieve a favorable resolution for your case.