Division of Marital Debt in a Divorce

Nowadays, many divorces involve dividing marital debts as a major issue.

Like marital assets, marital debts are "equitably divided" in Georgia. Equitably means fairly. Sometimes, fairly is equally, sometimes it is not. There are many factors considered by the courts to determine what is an equitable division of debt in a particular case such as the duration of the marriage, the earning capacity of each party, the assets each party is receiving in the divorce, how the debts were acquired, the needs of the parties, and the conduct of the parties.

For example, if one party racked up credit card debt behind the other party’s back for excessive amount of expensive clothing (beyond the parties’ means), expensive meals, and their own personal leisure, an equal division of that debt may not be fair. On the other hand, if the credit card debt was mostly used for household expenses and to cover excessive spending by both parties, equal may be what is equitable.

A large concern arises when the debt one party is ordered to pay is in both parties’ names and there are not sufficient assets to cover the debt. This often happens with joint credit cards. One solution is for each party to transfer the debt they are ordered to pay onto another credit card in their sole name and cancel the joint credit card. Unfortunately, this option may not always be feasible. In that event, often the party responsible for the credit card will be ordered to pay at least the minimum payments on time. It is better, of course, to require a more accelerated schedule of debt payment and an indemnification. This means that if the credit card company comes after the party that is no longer responsible for the debt pursuant to the court order, the other party must make them “whole”.

Joint credit cards and divorces can result in damage to each party’s credit. The best strategy is do take any steps necessary to have all joint credit accounts closed as soon as possible. It is always a good idea to run your credit report before finalizing a divorce to make sure there are no credit accounts attached to your name that you did not know about.

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