Many decisions must be made during the process of a divorce. The couple and the court must decide how to handle alimony, child custody, child support, and the distribution of assets and debts. Understanding how marital debt is divided in a divorce is crucial in ensuring your rights are protected and you are not burdened by the termination of your marriage. For more information and to obtain skilled representation in your case, reach out to an experienced Memphis, Tennessee property division lawyer today.
Is Tennessee an Equitable Distribution State?
Yes, Tennessee is an equitable distribution state. In an equitable distribution state, marital assets are not automatically split 50/50 between each spouse, like they are in a community property state. Instead, joint property is distributed between the couple in a way that is fair and equitable, ensuring that one party is not disproportionately financially disadvantaged as a result of the divorce. To make sure that the split is fair, TN courts take into account a plethora of personal and financial details of each spouse.
How is Marital Debt Divided in a Divorce?
Marital debt is divided between spouses in the same way that marital assets are divided, through equitable distribution. Courts aim to avoid burdening one spouse with a significant disadvantage during the divorce, so various factors are considered before determining who should be responsible for which debts. The following and more will be taken into account.
- The length of the marriage
- The amount of debt the couple shares
- Who incurred the debts and what they were used for
- The income and financial situation of each spouse
- The earning capacity of each spouse
Below are some examples of how different debts may be divided depending on the specifics of the relationship.
- Consider a couple where one spouse makes 5x more annually than the other spouse. The higher-paying spouse will likely be allocated more debt because they have the financial ability to handle paying it off.
- Suppose one spouse has wracked up thousands of dollars in credit card debt because of their spending problem. Even if the other spouse makes more money than them and the credit card is in both of their names, the individual who spent the money may bear the responsibility of paying it off because they were the ones who caused the unnecessary debt.
- If one spouse was awarded a significant asset like the marital home or vacation property, the court may also assign them a higher portion of the shared debt to even the playing field.
Keep in mind that couples are allowed to create their own debt division agreement if they are able to communicate and settle on a decision together. Tennessee courts generally require some mediation sessions before a case can go to trial. During mediation or through their own negotiations a couple can hash out the details of who should be responsible for certain debts and liabilities. The agreement will have to be reviewed by the court, but if it is generally equitable and works for their personal situation then it can be approved.
Speak with an experienced attorney at Rice Law today to set up a consultation.
