Who has to pay off the debts after a divorce?

Discussing debt is one of the more tense aspects of a divorce. Who pays off which debt? If there are any assets, which ones offset the debt?

New Mexico is a community property state. This means each partner keeps what they brought into the marriage whether it’s property, an inheritance or debt from, say, a school loan. Any assets or debts gathered during the marriage are considered community property, including debt (except gambling debt). After you add up the assets and debts, you split them evenly.

Couples sometimes have one partner keep a high-worth asset like a house and assume an equivalent amount of debt, leaving the other partner to walk away without much money but also without much debt.

Debt collectors just want the money

But there’s a trick: You two may split your debt with the promise you each will do your share to pay them off, but if your former partner reneges on the deal and fails to pay the debt, collectors will come after you for the debt.

A debt collector isn’t beholden to a divorce decree. You and your former spouse co-signed on a loan or credit card debt, so you both are liable to pay that debt. If your former spouse fails to pay the agreed-upon share, debt collectors can come to you to pay off the debt.

You could be on the hook

The other community property states are Arizona, California, Idaho, Louisiana, Nevada, Texas, Washington and Wisconsin. In those states, like New Mexico, if you both co-signed the debt, you both are responsible for the debt.

Despite the divorce agreement, creditors can sue you, garnish your wages, place a lien on your property or use other means to collect on the debt.

Experts say that one way to protect yourself is to close joint bank accounts and keep an eye on your credit report.