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How are separate and marital debt categorized in a divorce?

On Behalf of | Feb 7, 2023 | Firm News

Finances inevitably come to the forefront of many Virginia divorces. Finances can impact issues such as child support, spousal support, and property division. The allocation of debt can be vital to ensuring a party can move forward after divorce with confidence in their financial health. To ensure a fair and equitable resolution of a divorce case, it is important to have an understanding of separate and marital debt in the context of a marriage and divorce.

Separate debt

Separate debt stays with the party who incurred the debt. Generally, if debt was incurred by either person before they were married, it is separate debt. Similarly, if debt was incurred after the couple separated, it is separate debt.

In some cases, a party can show that separate debt was incurred because of family or marital needs. This could make it marital debt even when it otherwise would be separate. For example, if one party purchased a home before the marriage and the home and mortgage is in their name, but they intended for the home to benefit the family, a court could decide that the mortgage is marital debt.

Marital debt

Virginia courts have the power to apportion marital debt between the parties based on a variety of statutory factors.

If debt was incurred by either person during the marriage and before separation, it is considered marital debt. This is generally true even if the debt is only in one party’s name. For example, if the mortgage on a home purchased during the marriage is in only one person’s name, the mortgage is still considered marital debt.

There are exceptions here as well. If it can be shown that the debt was incurred for the individual and non-marital needs, then the court could decide that it is a separate debt.

Assessing debt during a divorce

The determination of marital and separate debt could have extensive ramifications in the aftermath of the divorce, especially when the parties have significant debt that could harm them after the divorce. Contacting professionals who are experienced in property and debt allocation can be essential to achieving a good outcome.