WHAT HAPPENS TO MARITAL DEBT AFTER A DIVORCE?
Who gets the home after a marriage comes to an end? Who will hold onto the family car? What about the business and savings accounts? Property division can raise more questions and concerns than nearly any other aspect of divorce, and understandably so. Your assets might be what defines the stability of your future. But what many divorcés overlook while they fight over property is what could be called the opposite of property: debt.
A family law court will view your marital debt as marital property. What this means is that if you and your spouse accrued that debt while you were married, it still belongs to both of you and will be subject to equitable distribution, or what is considered fair by the court. If you don’t want to end up with an inordinate amount of debt for which you really don’t feel responsible, you will need to convince the court that it would not be fair for you to get it.
Just as with physical property and assets you actually want, you can use evidence, proof, and records to claim or disclaims portions of your debt. Have you been prudent with your recordkeeping and bookkeeping? If so, you might be able to show that your ex-spouse’s private expenditures added to most of your marital debt. For example: Your spouse bought a motorcycle you do not like and never ride; why should that be part of your debt?
You can also use financial records to show what debt should be considered separate property based on the fact that it existed before the marriage. Perhaps your spouse was already in debt due to a failed business expenditure that occurred before you even met? The discovery process should reveal those facts, if you know where to look.
As strange as it might seem, debt in divorce is handled as property, but now it is property neither of you want.
To increase your chances of only receiving debt responsibilities that are fair, contact GEM Family Law to request a free consultation.