When entering into divorce, many people look at dividing the assets as one of the most important factors to consider. And it is. However, a lot of people fail to think about debts. It is easy to assume that whichever party took on a debt should be the one who absorbs the liability for the debt once the divorce is finalized. But this is not always the case.
It is critical to know how debt is divided before entering into a divorce. You need to protect your financial rights and your future.
How Debts Are Divided
Georgia is an equitable distribution state, as distinct from a community property state. Under the equitable distribution approach, equity is given prominence over an exact 50-50 split. So a judge could determine, based on the circumstances of the case, that the most equitable outcome in dividing assets and debts is far from an exact equal split.
In a recent post we discussed how assets are divided, and debts are divided in much the same way.
First it is critical to determine the extent to which a given debt should be considered marital or individual. There are always complications in this regard, as the type of debt, the timing of assuming the debt, whether the debt has benefited both spouses and other considerations will impact this determination. One example is credit card debts. Even if only one spouse opens a line of credit, it will usually be considered marital property – to be shared by both spouses – if the debt was taken on during the time of the marriage.
Then the actual valuation of a debt has its own complication. The compounding of interest and other factors make it difficult to know exactly how a judge will likely divide certain debts.
Protect Your Financial Interests
Because of that uncertainty, it is almost always beneficial to work out your asset and debt division arrangements outside of the courtroom through negotiation and mediation. With an experienced attorney on your side helping you through the process, you can be sure to protect your financial future through all aspects of your divorce.