Attorney
Polygamy is illegal in New Mexico. But if you and your spouse took out a mortgage together, opened joint credit cards, or personally guaranteed a business loan, you’ve been in a three-way relationship this whole time. And your lender is not going to want to call things quits just because you and your spouse are getting divorced.
Understanding what happens to debt at divorce, and how to actually separate your financial lives post-divorce, is the difference between a clean exit and a surprise you find out about when you check your credit report. As one of the few family law attorneys who has a head for numbers, Bob Matteucci is here to help you navigate this tricky process.
What is Joint Debt?
Oftentimes, there is one person in the marriage who handles the finances, while the other partner takes care of other tasks. So, figuring out how much debt a couple holds can be an eye-opening process. Particularly since New Mexico’s community property laws presume every debt incurred during the marriage is joint debt.
Most people are not surprised to they have to divide up joint debt like:
- Mortgages or home equity lines of credit
- Auto loans
- Federal or state tax liabilities
But it can seem unfair that both spouses are obligated to pay:
- Business lines of credit or loans that either spouse personally guaranteed
- Credit card debt wracked up without one spouse’s knowledge
- Loans for other vehicles like boats or motorcycles, even if only one spouse wanted to take on that debt
And yet, this is all considered joint, marital debt under New Mexico law.
The foundational idea behind this is straightforward: a marriage is an economic partnership, and everything acquired during that partnership — income, assets, and debt — belongs to both partners equally, regardless of who earned it, spent it, or borrowed it. This ensures each partner walks away from the marriage on equal footing, and less financial savvy partners are not trapped by their wedding vows.
Dividing Debt at Divorce
For high-asset couples, like business owners, professionals, and couples with multiple streams of income, the 50/50 split mandated by state law shapes how you negotiate. For example, you might be willing to give up your share of a joint asset in order to lessen your share of joint debt. But you can only make that trade intelligently if you have a clear, accurate picture of the full balance sheet going into negotiations.
Bob Matteucci, who holds an MBA from Tulane and a law degree from the University of New Mexico, and who went through his own divorce as a business owner before becoming a family law attorney, approaches debt division the way a financial analyst approaches a restructuring. He’s comfortable with balance sheets, cash flow projections, and the kind of financial modeling that most family law attorneys aren’t. If your situation involves a business, a professional practice, significant real property, or layered debt structures, that financial fluency matters.
Protecting Your Finances Post-Divorce
Once an agreement is reached, it’s incorporated into a marital settlement agreement and ultimately into the divorce decree. The decree will specify which spouse is responsible for each debt. It has the force of a court order, which means violating it has real legal consequences between the spouses.
While this may sound like the end of the debt division process, it is only the beginning. The third parties to your marriage, creditors, are not bound by your divorce decree. The bank, the credit card company, the SBA, the IRS — none of them care what the family court orders until you take the steps necessary to implement the decree.
Taking swift action to retitle assets that are now held separately, setting up new bank accounts, closing old accounts, updating beneficiaries, and paying off some debts while refinancing others is critical. Proper debt division negotiations should anticipate these actions and clear the way for them to happen.
Serving Families with Dignity & Compassion
A divorce decree may look like it divides your joint debt, but severing ties with debt that should no longer be yours following your divorce takes more than a piece of paper. A clean financial exit is something you have to construct, one account, one loan, one obligation at a time. The couples who come through high-asset divorces in the strongest financial position are those who understand that distinction, negotiate with clear eyes, and are willing to do the post-decree work needed to implement their plans.
If you’re navigating a high-asset divorce in the Albuquerque area and your financial picture is anything other than simple, the time to get the right counsel is before the agreement is signed. Contact Bob Matteucci to talk through your situation.