The role of debt in high-asset divorces is distinct from that of normal divorces. Large-asset couples utilise debt more as a means of leverage than as a means of subsistence. Nonetheless, this reality can make dividing debt following a divorce considerably more complex.
We can help get legal advice and ease your mind if you’re worried that the debt you and your soon-to-be ex-spouse incurred during their marriage may have an impact on the divorce proceedings.
Allocation of Liabilities and Assets
In Alabama, property and liabilities are distributed fairly. Therefore, the debt is not split evenly between the spouses, but rather in an equitable manner to both. The allocation of debt is affected by variables such as:
- To whom does the loan owe
- Divorce Causes and Effects
- Resources and earnings of both parties
- Moneymaking potential of both parties
- Everyone’s share of the tax load
Since debt is shared fairly after a divorce, you and your ex-spouse have a great deal of leeway in determining how to proceed.
Disparate Alabama Debt
In Alabama, unsecured debts are shared equally. For instance, if one spouse already has $40,000 in school loans, the debt is not often split 50/50. The spouse who brought it into the union is responsible for keeping it. Aside from those debts, the following would be split up:
- Money owed to you on credit. The same goes for credit cards in a single name. Credit card debt incurred during a marriage is often split in half if it was used for joint purchases or household expenses.
- Tax arrears. You and your ex-spouse could be jointly liable for any tax debt that exists after your divorce.
After getting hitched, the grad student debt load doubled. Student loans that were incurred during the marriage might be divided equally between the spouses.
Overspending on healthcare. Both partners should be prepared to pay for medical care.
Money borrowed on an individual basis. It is common for couples to share the burden of taking out a personal loan to pay for smaller expenses or consolidate debt.
Property and construction. Most couples with significant wealth carry real estate debt in addition to their principal residence mortgage. After a divorce, whoever keeps any investment or second home property is responsible for the debt associated with it.