How Is Debt Allocated in Alabama Divorces

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Courts in the state of Alabama have wide discretion in deciding how to divide marital debt between couples. So long as the division has a legal basis, a court is often permitted to divide debt however the court decides. In general, debt incurred during a marriage is viewed as marital liability in much the same way that many items gained during the marriage are viewed as assets.

Given the unpredictable way in which courts will divide debt, individuals in Shelby County often choose to rely upon the counsel of experienced divorce attorneys to reach the best potential outcome or settlement. There is also some basic information that individuals in Shelby County should know concerning debt allocation.

Equitable Distribution In The State of Alabama

The state of Alabama is considered an equitable distribution state. Equitable distribution refers to the “fair” but not “equal” distribution of marital property and debt between divorced spouses. Property distribution in the state of Alabama also requires that divorcing spouses fully disclose all information about all assets and debts held by that couple.

Community Property And Separate Property In Shelby County Divorces

When property is owned by both individuals in a marriage, that property is said to be community property. When property is owned by only individual, however, that property is considered to be separate property.

There are various factors that determine whether debt is considered separate or community property, which include: whether the property was incurred by one party before the marriage and if the debt incurred during the course of the marriage. Debt that was incurred prior to the marriage still belong to the individual who originated the debt.

Debt that was incurred during the marriage is often considered to be community property with several exceptions. These exceptions include credit documents that lack signatures of both spouses or whether a debt was intended to benefit both spouses.

Important Details To Remember Concerning Debt Allocation in Birmingham

There are some additional pieces of information that individuals involved in a divorce should remember concerning debt allocation, including:

  • Credit Cards. Even though a credit card debt is in the other spouse’s name, this debt does not automatically become the debt of the named party.
  • Marital Debt. There are some things that can be marital debt of which a spouse might not be aware including gambling losses, student loans, and shopping sprees. As long as the debt was acquired during the marriage, the debt will likely be considered to be community property.
  • Potential Issues of Bankruptcy. Debt allocation can become quite complicated when bankruptcies are involved and frequently demand the expertise of seasoned divorce attorneys. Also, creditors tend to not follow terms of divorce decrees, which means that creditors might attempt to collect debts from an individual even though the terms of a divorce dictate that the other spouse is required to pay this amount
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How An Experienced Shelby County Divorce Attorney Can Help

If you are involved in a divorce that will involve the separation of considerable debt, do not hesitate to contact a talented Birmingham divorce attorney at Alabama Divorce & Family Lawyers, LLC. Our legal counsel will know how to anticipate and navigate the various issues that might arise concerning debt.

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