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How Is Debt Divided in a Virginia Divorce?
During a divorce , the division of the marital estate is one of the biggest issues that must be resolved. But this process is not all about just dividing assets, the couple must work out how their debt is going to be divided as well. Virginia is an “equitable distribution” state, which means that there does not necessarily have to be a 50/50 split of all of the assets and debts; the goal of the courts is to ensure that the marital estate is divided fairly, although this often ends up being somewhere close to an equal distribution.
Categorizing Debt During a Divorce
Before getting into the division of debt, it must first be determined which debts should be included in the marital estate. There are three general categories of debt for married couples:
- Marital Debt: Debt that was acquired during the marriage with both spouses’ names attached to it will almost certainly be categorized as marital debt. Common examples include joint purchases of large assets such as homes and vehicles and joint credit card debt.
- Separate Debt: Any debt that was acquired before the marriage or after the couple separated is likely to be considered separate debt. Student loans are one example of separate debt that spouses often bring into marriage.
- Hybrid Debt: Some types of debt might fall into a gray area in which it could fit into either the marital or separate category. For example, one spouse buys a home while still single, but after getting married, the couple chooses to live in that home and pay down the mortgage together.
In general, only marital and hybrid debt is included in the division of the marital estate, and some hybrid debt could be excluded and belong solely to the spouse who took it out depending on specific circumstances. Separate debts will normally remain the responsibility of the spouse for whom the debt belongs.
Factors that are Considered When Dividing Marital Debt in Virginia
Whenever possible, it is in the best interests of divorcing couples to work out the division of marital debts fairly between themselves and without the involvement of the court. This could be done through mediation or negotiation between the spouses’ attorneys. If they can work out a peaceable settlement on their own, then they are more likely to arrive at an outcome that both spouses will be satisfied with.
If the case ends up being decided by the court, a judge will look at several different factors to determine how the debt is divided:
The Roles of Each Spouse in Acquiring the Debt
One major consideration when it comes to dividing marital debt in Virginia is how each spouse contributed to the accumulation of the debt. For example, if the couple has a joint credit card account but one of the spouses ran up most or all of the charges on the account, then that spouse is likely to end up with the debt.
Which Spouse Will Keep Any Asset(s) that May Be Related to the Debt
If the debt was secured by certain assets or property, such as a house or car, then the court will likely assign the debt to whichever spouse is keeping that specific asset. This could also be a consideration with unsecured debts like credit cards if they were used to make a large purchase, say an appliance or furniture set. Again, whoever is keeping the property will probably end up with the debt that was used to finance the purchase of it.
The Income of Each Spouse
In some marriages, there is a wide disparity in the income of the two spouses. When the couple went into debt together, it was probably based on their combined income. So, when they divorce, the income of each spouse must be strongly considered in determining what percentage of the marital debt they will assume.
Tax Implications of Assuming the Debt
Certain types of debts can incur tax implications. For example, home mortgage interest is usually tax-deductible. How a debt might impact a spouse’s taxes is another factor that the court may consider.
Circumstances of the Divorce in Relation to the Debt
In some instances, one of the major reasons for the divorce is financial irresponsibility or abuse on the part of one of the spouses. For example, running up massive credit card debt to support a shopping or gambling addiction. When this is the case, the financially reckless spouse is likely to end up with the vast majority of the marital debt.
Contact with a Reputable Virginia Divorce Attorney
If you are moving toward getting a divorce, you need an attorney you can trust to help you work out important issues such as the division of marital assets and debts. If you are in Virginia, turn to Buck, Toscano & Terezkerz for the skilled legal guidance you need. For a free initial consultation with one of our Charlottesville, VA divorce lawyers, message us online or call our office today at (434) 977-7977.
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