Between credit cards, mortgage loans, car loans, and student loans, Americans are in a whole lot of debt. Owing money can be hard to cope with under the best of circumstances, and when your debts get tangled up with marital issues during a divorce, things can get truly ugly.

If you decide to end your marriage, you'll need to address not only how to divide your assets, but how to split the debt you and your spouse collectively owe. Unfortunately, the process is actually even harder than it looks -- and if you don't do it right, you could get stuck having to pay back your spouse's debt after a divorce.

Woman holding credit cards

Image Source: Getty Images.

Who is responsible for debt after divorce?

Generally speaking, each spouse is responsible for the debts he or she brings into the marriage. After they're married, though, the rules vary by state. In most states, each spouse is responsible for debt incurred individually during the marriage, and both spouses are jointly liable for debt for which they both cosign.

However, in states that use "community property" rules -- Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin -- spouses are jointly responsible for all debts incurred while wed, no matter whose name is on the loan. 

You and your ex can agree on who will be responsible for debt repayment, or a judge can divide up your debt if you can't come to a consensus. Whichever approach is taken, your formal divorce settlement agreement will specify who must pay. 

You could still get stuck with debt assigned to your ex 

Most people assume that if debt is assigned to their spouse during divorce, they're no longer on the hook for payback.

Unfortunately, this isn't true if the debt is for a loan you cosigned for. If your spouse kept the house and agreed to make the mortgage payments but your name is on the loan, the mortgage lender will still hold you responsible. Likewise, if your name is also on a credit card, personal loan or car loan, the creditor still views you as liable for the debt no matter what your divorce agreement says. 

Your divorce agreement is a contract with your spouse, and the creditor isn't bound to abide by it. Your creditors based their approval of the loan on your joint income and credit, so they can still come after you if your ex decides not to pay. 

This means if your ex stops sending in the monthly payments or is late with the bills, you could end up with ruined credit, and creditors could sue you to collect. This could lead to wage garnishment, a lien on your house, and all the other unpleasant consequences of being delinquent on your debts.

What can you do to protect yourself?

The first thing you should do is close any joint credit card accounts and other joint accounts you and your ex-spouse may share. Beyond that, the only way to protect yourself from potentially being held responsible for your spouse's debt is to make sure the debt is either paid off in full upon your divorce or refinanced so that it's solely the legal responsibility of the spouse assigned to pay.

While it can be challenging to come up with the cash to repay debts, and refinancing is sometimes difficult on one income, taking one of these steps is vital to ensuring your own credit and future financial security aren't reliant on your ex's full and consistent debt repayment.

If none of these options are possible, watch your credit report carefully so you'll know right away if your spouse has stopped paying. You could try to go back to court if this happens, but it may prove ineffective, given that your ex is already ignoring a court order.

If you can't get your ex to pay, you'll have to either cope with ruined credit or bite the bullet and voluntarily pay back the debt yourself before the creditor comes after you and tries to make you repay it anyway.

And as you prepare to move on to the next, more financially independent chapter of your life, make sure you also rethink your budget and figure out how your tax situation will change.