Debts Are Divided Like All Other Property In a Divorce
Like a majority of states, Georgia uses “equitable distribution” principles when it comes to dividing marital assets and debts in a divorce. That means a court will divide the property and debts accumulated during a marriage “fairly,” not necessarily right down the middle. While this might seem easy at first glance, the difficulty lies in determining what is marital property, what is marital debt and which spouse is responsible for what portion of it.
Marital property consists of any assets acquired during the course of a marriage, other than gifted property or assets received through inheritance. Similarly, debts acquired during the course of a marriage are attributed to both spouses. At the time of divorce, courts will divide marital assets and debts so each spouse takes a roughly equal percentage of the total value.
Just like assets brought into a marriage are considered separate property belonging to that spouse, so are debts. But courts may also deem some debts acquired during a marriage to be separate property. For example, gambling debts incurred by one spouse will not generally be attributed to the other. Courts are also reluctant to make one spouse responsible for the excessive living expenditures or unreasonable investments of the other.
Separate debt is much less common than marital debt as most liabilities are incurred for the benefit of both spouses, either directly or indirectly. Courts across the country have made rulings about specific debts that belong to the marriage. Those include debts from a family run business (even if only spouse operates it), tax liabilities and even some post-separation living expenses.
Regardless of a court’s findings on the classification and division of debts, such an order is only binding between the parties, but not binding on creditors. For example, credit card companies can go after either spouse for the full amount of debt regardless of how the spouses or court have divided it. One spouse’s refusal to pay can have disastrous consequences for the other’s credit.
If you are considering divorce, contact an experienced divorce attorney to discuss your financial situation and determine what actions you can take now to protect yourself in the future.