What Happens to Debt Accrued During a Marriage in a Divorce?
Before debt can be equitably divided in a divorce, it must first be properly classified.
Like most other jurisdictions, Georgia is an equitable distribution state. The marital estate, which includes both assets and debts, must be divided equitably. That is not necessarily the same thing as “equally.” Equitable could have a different meaning, largely depending on several property division factors, which are outlined below.
However, before debts are divided, a Norcross divorce lawyer must first help to assess them. Unless the parties have a premarital agreement which makes these determinations in black and white, this exercise is usually the most time-consuming portion of a marriage dissolution proceeding.
Classifying Marital Debt
Generally, debts which either party acquired before the marriage or by assignment are nonmarital debts. Anything else is marital debt. That division seems straightforward, but it is actually quite complex in many cases.
Examples are everywhere. Assume Husband uses money from his paycheck (marital asset) to make payments on his student loans (nonmarital debts). If the parties divorce, Husband may not receive 100% credit for his student loan debt retirement. Wife may be entitled to some of the money he paid.
Commingled property is very common in lengthy marriages. Frequently, couples are fairly diligent about keeping accounts separate, for a little while. Later, the boundary lines become blurry. Eventually, they disappear altogether.
The more contested the divorce is, the more complicated these questions become. In many cases, if one party anticipates a divorce, they may increase their wage withholding so their income appears lower.
To resolve these issues, Norcross divorce lawyers often turn to forensic accountants and other outside professionals. If that approach sounds protracted and expensive, it usually is. However, it is usually necessary, unless the parties have an enforceable premarital agreement.
Dividing Marital Debt
Once debt is classified, it can be divided equitably along with marital assets. Most marriage dissolution matters settle out of court. So, during the division process, attorneys must be mindful of some key factors. Otherwise, the judge may not approve the settlement agreement. Some common debt division factors include:
Health and Age of Each Spouse: Generally, younger and healthier people can earn more money than older or sickly people. These things may affect the amount of debt a party can comfortably assume.
Custody of Minor Children: Typically, it is in the best interests of the children that they remain in the marital home. If that happens, the residential parent may need some help with the mortgage and/or other house-related debts.
Financial Needs and Means: This factor is related to the first one. By law, the divorce cannot be an unfair financial burden on either party.
Informally, after lengthy marriages, most judges use the standard of living during the marriage as something of a financial compass.
Mediation is useful in contested debt distribution cases. A neutral, third-party mediator often brings a fresh perspective to the case and helps the parties reach a mutually agreeable solution.
Reach Out to our Dedicated Attorneys
Divorce debt division is usually a multi-step process. For a consultation with an experienced Norcross divorce lawyer, contact Zimmerman & Associates, Attorneys at Law. After-hours visits are available.