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37 Calumet Parkway, ​Building N
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Newnan, Georgia 30263

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How Are a Couple’s Debts Split During a Divorce?

Going through a divorce can be emotionally taxing, especially when there are contested issues concerning finances. In Georgia, as in many other states, the division of the couple’s assets is controlled by the rule of equitable distribution. This means dividing property fairly but not always equally. Debts are divided according to the same principle, but the process can be more complicated based on the nature of the debts, their origin and other factors, including the rights of third creditors.

For purposes of equitable distribution, assets are categorized as either marital or separate. Marital assets are those acquired during the course of the marriage, regardless of who purchased them. Separate assets are those acquired before the marriage or outside the scope of the marriage, such as a gift or inheritance received by one spouse.

Debts incurred during the marriage are treated as marital property. They are divided by a judge taking various factors into consideration, including the following:

  • Responsibility for debt accumulation — If one spouse was solely responsible for incurring a debt, they may be allocated a greater share of it. For example, one spouse may have taken on debt in the course of business activities, from which the other spouse derived no benefit.
  • Who keeps the property involved — If a debt is secured by an asset, such as a home mortgage or car loan, the debt may be allocated to the spouse who is awarded the asset. Or the asset may have to be sold and the profits divided equitably.
  • Financial standing and ability to repay — The judge looks at each spouse’s income, assets, liabilities and financial obligations and may assign more debt to the spouse with the greater ability to repay. There may be a correlated increase in assets awarded to that spouse.
  • Alimony and property division — In some cases, more debt might be assigned to one spouse to offset the marital property and/or alimony they will receive.

A divorce decree does not absolve a person’s legal liability to creditors for joint debts. If both spouses’ names appear on a loan agreement or other financial obligation, the creditors may hold either spouse responsible for a default on payment. For this reason, divorce decrees or settlements sometimes include a “hold harmless” clause, which requires one spouse to indemnify the other spouse from any loss or expense arising from failure to repay the joint debt. An experienced divorce attorney can help you explore options for dividing debts during the divorce and for obtaining protection against undesirable financial consequences afterward.

The Law Office of S. Mark Mitchell, LLC in Newnan works diligently and compassionately with Georgia residents going through divorce, helping them move forward with their lives. Call 470-344-8550 or contact me online to schedule a free initial consultation.