31st Aug 2014
How is debt allocated in a divorce? Am I responsible for debt in my Wife’s / Husband’s name? Am I responsible for a debt, if I did not know about it? Am I responsible for a debt even if my name is not on the credit card?
These questions are asked by client’s in the overwhelming majority of divorce cases that our office handles. While there is no strict rule that applies in every case, there are general guidelines that can be used to analyze and determine how debt should be divided in a divorce, dissolution or collaborative family law case.
These guidelines would apply to clients in all Ohio counties. There is no difference in how debt is allocated; it does not matter if you live in Cincinnati, Ohio, Hamilton, Clermont or Warren County.
There are two main questions to ask when you are looking at a debt:
First, was the debt incurred during the marriage? During the marriage is typically defined as the date of marriage to the date of separation, date of the filing of the divorce or the date of the property trial.
Second, was the debt incurred for a marital purpose? A marital purpose is broadly defined. A marital purpose can be clothes, jewellery, auto’s, food, etc. An example of debts that would not be considered a marital purpose would be gambling, drugs, or money spent on another individual in an adulterous relationship.
If the answer is yes to these two questions, more than likely the debt is going to be considered marital, and in most circumstances the court will divide the debt equally between the parties.
It does not matter that you did not know your spouse was incurring the debt. It does not matter that you are not listed on the credit card or debt. The only issue that arises if an individual is not a listed obligor on a debt, is that only that person can be sued in court by the creditor. This does not prevent the Domestic Relations Court from requiring an individual to pay a debt that they did not sign for.
There is one major exception to this general rule; if you can identify the item the debt is associated with the entire debt follows the item. Two good examples of this exception are automobiles and homes. If you own a car / home, and you want to retain the automobile / house, you pay the entire debt. Your spouse does not have to pay ½ of the auto loan or mortgage for the car you are driving or the home you live in. If you do not want the car / home and neither does your spouse, the item would be sold, and then remaining debt, if any would then be divided.
The information listed above is a general discussion concerning the allocation of debt in a divorce, dissolution or family law case. There are circumstances where the court may not allocated debt equally. If the parties have vastly different income levels, in lieu of spousal support (alimony) the court may allocate the debt to one spouse only. Bankruptcy issues come into play in many divorce cases. There are too many exceptions to list in any blog article. If you are considering divorce or need legal counsel, contact Andy Ice, reputable divorce attorney in Cincinnati, Ohio, Hamilton, Clermont and Warren County for a complimentary consultation at 513.651.4227 or for more information please visit www.AndrewIceLaw.com.