Forget The Property, What Happens To Our Debt In Divorce?
One of the biggest aspects of your Virginia divorce will be dividing up property and marital assets. However, you and your spouse’s debts will also be divided in your divorce. Here is a brief look at how your debts will be distributed under Virginia law.
Virginia is an equitable distribution of property state. This means that property will be divided equitably in divorce. However, this does not mean a 50-50 split. Rather, the court divides property fairly, giving you your fair share of marital assets based on your own contribution(s) – both financial, emotional and physical.
This same principle applies to the division of marital debts.
When dividing marital debts, a Virginia court will consider three factors: (1) the debts and liabilities of both you and your spouse, individually and together; (2) the basis for these debts and liabilities; and (3) the property used as security for these debts and liabilities, if any.
The debts you and your spouse incur separately (titled solely in you or your spouse’s name, alone), either before marriage or during marriage, will remain your own obligation in divorce. For instance, if you had a car loan before your marriage that has not been paid-off at the time of your divorce, this debt will remain entirely your obligation after your divorce. Debt may be apportioned to both parties regardless of how it is titled. The presumption is that any debt acquired during the marriage is marital unless it can be proven separate.
For debts titled in both you and your spouse’s names, each of you will be jointly responsible for payment of the debt. This means that if your spouse does not pay anything at all (despite being required to do so), the creditor can come after you for full satisfaction of the debt.
Though a court will try to divide marital or jointly owned debt fairly in your divorce, or you and your spouse may agree to pay certain debts titled in one or both of your names in your settlement agreement, the court order or mutual agreement will have no effect on third party creditors. In other words, if your spouse agrees or is court ordered to pay for a debt that is in your name and fails to pay the debt, the creditor can only come after you for payment because you are the named debtor. For this reason, your attorney should ask the court to include a provision in the court order (assigning debts) or provide in your settlement agreement that in the event your spouse fails to pay for his or her required debts, you have the right to sue your spouse for any amounts you had to pay the creditor(s). This is called an indemnification clause.
If your court order dividing debts or settlement agreement does not include an indemnification provision, you may be able to petition the court to give you a monetary award for what you paid creditors. However, this will require a court hearing and the presentation of evidence which can be costly and time consuming. For this reason, it is important that you hire a good family law attorney who will protect your interests from the get-go
There are a number of considerations to be aware of when dividing and allocating debts during a divorce. If you are currently going through a dissolution of marriage action or are considering divorce, the family law attorneys at the DiPietro Family Law Group have decades of experience with all family law issues in jurisdictions across Northern Virginia, Maryland and Washington, DC.
Contact us today for a consultation at (888) 530-4374.