One of the many tasks facing a couple at separation is what to do about splitting up property and debt. In an age where divorce is common and marriage occurs later in a person's life, many individuals come into a marriage already saddled with substantial debt. While her spouse will generally not be held responsible for her separate debt, it can affect the divorce case in several important ways.
Division of Marital Property and Debt In General
All states divide marital property and debt according to the laws of equitable distribution or community property. Community property states divide the marital estate equally, while equitable distribution states presume that an equal division is equitable, or fair, but provide for an unequal distribution in the presence of one or more statutory factors. States generally define marital property and debt as that which either party acquires after date of marriage and before either date of separation or, in some states, date of divorce. These are the bookends for the marital estate, and the court can only divide marital property and debt.
Separate Property and Separate Debt In General
Separate property and debt consists of that which a party incurred prior to date of marriage and after either date of separation or date of divorce. The separate debt of a party is that party's debt solely, and a court cannot assign responsibility for that debt in a later divorce case. As such, parties are not responsible for debt that the other party carried into the marriage, unless they refinanced it into an equity line or took a loan in their own or in both names to pay off the debt.
Distribution of Debt In Equitable Distribution States
Although separate debt cannot be distributed, it can affect the division of the marital estate in equitable distribution states. The existence of a substantial separate debt load can serve as a "distributional factor" justifying the entry of an unequal division in favor of one party over the other. As such, a party with a substantial separate debt load may receive more marital property and less marital debt than the other. Conversely, the couple's use of marital income to pay down that party's separate debt during marriage can also serve as a distributional factor.
Effect Upon Spousal Support
In addition to influencing the division of the marital estate in equitable distribution jurisdictions, a party's separate debt load can affect the outcome of an action for post-separation support and/or alimony. A party carrying a high debt load may have little or no income available to pay support, reducing his viability as a supporting spouse. Furthermore, the existence of the separate debt load probably meant that during marriage, the parties used marital funds to service the debt, which reduced their standard of living. On the dependent spouse's side, the existence of a substantial debt load reduces her available income for the payment of expenses, increasing her need to receive support from the other party in order to maintain her standard of living from the marriage.
0 comments:
Post a Comment