Along with marital assets, the marital debt between the parties will have to be divided as well. Any debt incurred during the marriage is considered marital debt. There are two types of marital debt. The first is the joint marital debt which is incurred in both of the party’s names. The second is debt incurred during the marriage but in only one of the party’s name. For example, one spouse has a credit card in her sole name with a $50,000 dollars owned on it. Since the debt was incurred during the marriage it is considered marital debt and will have to either be divided or the parties will come to an agreement on who will be responsible for paying off the debt. Any debt incurred before the marriage will be considered separate property. For example, student loans taken out prior to the marriage will be the party’s sole responsibility and not subject to equitable division.
How is debt equitable divided?
In some divorce cases where there are little to no joint debts, each party can agree to be responsible for the debts in each of their names. In most cases, it has to be decided how the marital debt will be taken care of because parties will have multiple debts that are joint or in one spouse’s name. If an agreement on the marital debts cannot be reached and the matter is brought before the Court be aware Georgia does not have set guidelines on how to equitable divide the debt. Some factors the judge will consider are each party’s contribution to the marital debt, each parties’ ability to pay back the debt, and each parties current outstanding commitments.
Failure to pay marital debt obligations
It is important to note that the third party creditors are not held to the Final Judgement and Decree of Divorce because they are not a party to the divorce. For example, the husband was to pay off the wife’s credit card in the settlement agreement and did not fulfill that obligation. The creditor would then go after the wife for failure of payment since the credit card is listed in only her name. In many settlement agreements, there will be language that will “hold-harmless” the spouse who is not obligated to pay off the debt and instruct the obligated spouse to prevent the creditor from seeking payments from the other spouse. However, failure by the obligated spouse to do either can result in a contempt action being brought against them. It is important to have an experienced Family Law attorney on your side when navigating through the divorce process. Give us a call toll-free at 866-527-2630 to set up a consultation with one of our experienced Marietta Family Law Attorneys.