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What Happens When a Debt is in Dispute in Divorce

When a debt is in dispute during divorce? When a debt is in dispute in a divorce, the two spouses could either reach an agreement about who will pay the debt and do a quick uncontested divorce in Jefferson County, or wherever they reside. If they cannot reach an agreement, then a judge will have to decide, and they usually do so based on the following factors:  Disputed Debts in Divorce

  • who incurred the debt
  • who signed for the amount, and also who signed as a surety, the party who is responsible if the debtor does not pay
  • when the debt was incurred, particularly if it was incurred before the marriage 
  • whether the item for which the debt was incurred benefited the minor children and 
  • the purpose of the debt, particularly if the purpose served a family business that is being divided in the divorce, or the item for which the debt was incurred served to help one spouse earn a higher income.

A person who is not legally responsible for their spouse’s debt, such as student loans the spouse incurred before the marriage, should talk to a Birmingham divorce attorney before signing a contract with the loan provider to pay the debt. Since Alabama is an equitable distribution state, parties may come to an agreement about how assets and debts should be divided. They can state their conclusions in the marital settlement agreement (MSA) that they present to the court in an easy uncontested divorce in Madison County, Alabama.

If the spouses do not agree on how a debt should be decided, the court will make the decision for them. The spouses will then need to share information and documents with the court about how the debt came to exist and who benefits because of the item obtained because of the debt. One spouse may be ordered to pay the debt in question, while the other spouse may be ordered to pay another debt. If the parties cannot reach an agreement and do an easy divorce in Morgan County, or anywhere else in Alabama, then the judge will have to decide.

Equitable distribution does not mean each spouse has to pay exactly half of every debt. One spouse’s payment in full of one debt can offset the other spouse’s payment in full of another debt.

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