What Happens to Debt in a Divorce in Georgia?

If you or your spouse accumulated a significant amount of debt during your marriage, you may be wondering, “what happens to debt in a divorce in Georgia?” Just as marital property must be split between spouses in divorce, marital debts must also be allocated. It’s vital for spouses who are parting ways to understand the difference between separate and marital debts in divorce, and how a court would determine how these liabilities are divided.

Key Takeaways

How is Debt in a Divorce in Georgia Divided?

One of the most important steps in the Georgia divorce process is dividing property and debts. Georgia follows the rule of equitable distribution when it comes to dividing marital property and marital debts in divorce. This doesn’t mean that debts must be split equally, but rather, a judge would divide them in a way that they deem fair. In accordance with the equitable distribution law, a court would consider a number of factors in determining division of marital debts, including:

• The length of the marriage
• The source of the debt
• Each spouse’s contribution to accumulating the debt
• Each spouse’s financial and non-financial contributions to the marriage
• Each spouse’s income, earning capacity, and ability to repay the debt
• Wasteful dissipation of assets or marital misconduct

A court would also consider which spouse will be keeping the asset. If a spouse will be assuming ownership of a specific asset, the court may assign responsibility for the associated debt, as well. For instance, the spouse who is awarded the marital home may also assume the mortgage.

Do Marital Debts Always Need to Be Determined By a Judge?

A court doesn’t always have to divide marital debts. A couple can enter into a settlement agreement in which they decide for themselves who is responsible for which debts. Mediation and the collaborative divorce process can help spouses resolve these issues without judicial intervention and remain in control of the outcome, rather than allow a judge to determine their financial issues. Critically, these alternative dispute resolution methods allow couples to find creative solutions regarding debt division that might not be available in the courtroom.

In addition, if there was a prenuptial or postnuptial agreement in place, it may specify how any debts should be handled. A prenup or postnup can provide specific instructions for who is responsible for what debts in the event of divorce and define what constitutes marital debts vs. separate debts. As long as the prenup or postnup is valid and enforceable, a court would adhere to its terms when dividing debts.

What Debts are Considered Marital vs. Separate in Georgia?

In determining whether a debt in a divorce in Georgia is a marital debt, a court would evaluate whether it was incurred during the marriage, prior to the date of separation. It does not matter which spouse’s name the debt was in. If it was accrued while you were married, it would be subject to division in divorce. Marital debts subject to division in divorce typically include the mortgage on the marital home, credit card balances from shared living expenses, auto loans, lines of credit used for home renovations, and any debt incurred to acquire marital assets.

Separate debts are those that were incurred by either spouse prior to the marriage. Courts will look closely at the timing of when the debt was incurred to determine how it should be characterized. Student loans, credit card debt, car loans, and other debts that either spouse took on before the date of the marriage or after the date of separation will typically be the sole responsibility of the spouse that took on the debt.

Notably, while student loans are generally considered to be separate debts, if they were taken out during the marriage for the benefit of the couple’s finances, a court would likely determine they are marital debts in divorce.

Are You Still Responsible for Your Spouse’s Debts After Divorce?

It’s crucial to understand that your divorce decree doesn’t nullify creditors’ rights. If your name is still on the loan, you would be legally responsible for the debts associated with it. After debt in a divorce in Georgia is allocated, it’s essential to take the necessary steps to remove yourself from any accounts you are not responsible for repaying to avoid liability. This may mean refinancing the loan or transferring the debt to one spouse’s name. Be sure to monitor your credit report following divorce for any errors, discrepancies, or unrecognized accounts.

Contact an Experienced Georgia Divorce Attorney

If you have questions about what happens to debt in a divorce in Georgia, it’s essential to consult with a knowledgeable divorce attorney. At NVP Family Law, we provide trusted representation and compassionate counsel to clients in Georgia for a wide range of divorce matters, including those involving property and debt division. We welcome you to contact us for a consultation online or by calling 470-314-0253 to learn how we can help.