During a divorce, the concerned parties often have difficulty in understanding exactly how things will happen and especially how debt, if any, will be divided. The division of debt will continue to affect the finances of both parties in the years to come.
Simple, common occurrences, like being behind on the mortgage, credit card debt, or an active car loan can cause some very serious problems at the time of the divorce. Most of the time, the concerned couple is not able to mutually decide on who will pay these debts. Therefore, when such an issue arises, the court makes a decision for them.
The law in Georgia follows equitable distribution when it comes to the division of debt during a divorce. This means that there is a chance that one spouse will have to pay more than the other. In equitable distribution states, the courts need not always divide debt or even marital property equally between the two parties.
What is Marital Debt Under Georgia Law?
In Georgia, the debt acquired by either spouse separately, or by both together, after the wedding is known as marital debt. If one spouse acquires a credit card or takes a loan in his or her name, the debt will still be treated as a marital debt at the time of divorce. Any debts incurred before marriage will not be taken into consideration by the courts and will not be distributed between both parties.
How Does Equitable Distribution Work?
The judges have the liberty and the discretion to divide all debt and marital property in a way that they find fair and just. To do this, during the division of debt, the following factors are taken into consideration.
- Contribution of each spouse in the accumulation of the debt.
- The income and assets of each spouse (to determine their ability to pay a portion of the debt).
- The obligations or liabilities that each spouse already has.
Once the debt has been divided according to the system of equitable distribution, there are two ways the parties can pay. The Georgia courts either assign different accounts to the spouses or they are both obligated to pay a particular percentage of the total amount once the divorce is finalized until the accounts are completely paid off.
Secured debts like mortgages are not treated in the same way as unsecured debts like credit cards. In the case of secured debts, the spouse who keeps the asset might be asked to take care of the related debt.
However, under Georgia law, equitable distribution allows concerned parties to completely eliminate debt. This can be done if there are enough assets to cover the debt. For example, if no spouse wants the shared house, it can be sold to pay off the mortgage, or if there is an investment account, then proceeds from cashing it can be used to pay credit card debt.
Contact an Experienced Georgia Divorce Attorney
To know more about the division of debt during divorce, contact our expert family law attorneys now. The attorneys at Lankford & Moore Law will help guide you through debt division and all aspects of your divorce.