A major element of most divorce cases is the division of assets and debts accumulated during the course of the marriage, according to the American Bar Association. Although there are differences in divorce laws from one state to another, including the area of division of debt, the general practices and procedures across the United States rely on similar legal principles.
Marital Debt
Only marital debt is subject to division between spouses in a divorce case. Marital debt is defined in all states as financial obligations acquired by a married couple during the course of a marriage. If one spouse acquired debt before the marriage, that financial obligation is set aside specifically to that spouse. The other party to the divorce has no obligation to pay part of that debt.
Types
Divorce laws in the 50 states utilize one of two methods for dividing assets and debts of a couple in a marriage dissolution case. A community property state generally divides the assets and debts of the parties in equal shares. An equitable division state divides the assets and debts of a divorcing couple in a manner that is deemed fair and just under the circumstances of the case. Equitable does not mean equal. There is no specific formula used by a court to determine equitable division. Rather, a judge legally is obligated to look at the specific facts of the case and the financial circumstances of each party individually.
Settlement Agreement
Divorce laws are designed to encourage a couple seeking marriage dissolution to attempt to negotiate a settlement of their differences, according to the American Bar Association. A divorce judge prefers that a couple reach a settlement regarding which spouse will be responsible for particular debts after a divorce. These negotiations concerning distribution of debts are formalized in a settlement agreement. Provided the manner in which the debt is distributed is not unduly lopsided, a judge typically approves a voluntary settlement.
Divorce Decree
Absent a settlement agreement, the court conducts a trial to resolve outstanding issues, including the division of debt between the parties. In a community property state, the judge computes the total amount of debt outstanding. The judge assigns individual debts between the parties in a manner to achieve as equal an allocation as possible. The task of a court in an equitable division state is more complex. Not only must the court determine the total amount of debt due and owing, the judge needs to analyze such factors as the potential earning power of each individual party and the types of financial obligations that the parties accumulated during the marriage.
Enforcement
Once a divorce decree issues from the court, the parties must comply with its directives regarding debt obligations. Upon a motion of a party contending that the other former spouse is not honoring a debt obligation, the court is empowered to impose sanctions. For example, the court can hold a party to a divorce case not complying with a debt obligation in contempt.
References
- American Bar Association: Section of Family Law
- "Nolo's Essential Guide to Divorce"; Emily Doskow; 2008
- "The Divorce Organizer & Planner"; Brette McWhorter Sember; 2004
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