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Birmingham Divorce Lawyer > Blog > Divorce > Dividing Up Debt In A Divorce

Dividing Up Debt In A Divorce


Usually when people start thinking about divorce, their first thoughts are of their assets. Most Google searches about divorce involve questions about how to “keep my house” or “protect my business” in a divorce. However, you may be surprised to learn that the division of debt in a divorce is just as important, and can have just as much of an impact financially. It can feel like adding insult to injury, having to stare all of your debt in the face while you’re also dealing with the stress of pain of a divorce, but it is just another aspect of divorce that must be dealt with, and an experienced lawyer can make all the difference in being able to do so sanely and efficiently.

How is Debt Divided in an Alabama Divorce?

Alabama is a community property state, which means that any assets acquired during the marriage (of course, with some exceptions) are treated as community property and divided equally between the spouses. Although this may not always be a perfect 50 – 50 split, an effort is made to allocate an equal value of the shared assets to each spouse. In Alabama, debt is handled exactly the same way. Debt and assets may be used to offset each other, to help create a more equitable balance of assets and debt between spouses. For instance, a spouse that receives a larger share of the assets, or a highly valuable or desired asset, such as the house, may also assume more of the couple’s debt to make it a more equitable balance.

Potential Pitfalls When Dividing Debt in a Divorce

The biggest potential issue when dividing debt in a divorce is not being aware of all the debt that exists. Working with an experienced attorney and hiring a forensic accountant to ensure that all debts and assets are accountable is a critical step. You simply can’t know what you don’t know, so a fair negotiation requires complete information. It’s also important to understand that the divorce agreement as to the allocation of debt is not always binding over the agreement made with the actual lender or creditor. Although the divorce agreement represents a binding state law, and if you or your spouse breach the agreement you can be held in contempt, it is superseded by contract law. For instance, consider a situation where you and your spouse took out a joint credit card during the course of your marriage, and that it had a balance of $10,000 on it at the time of your divorce. If the divorce agreement stipulated that your spouse was responsible for making the payments on this debt, but your spouse failed to do so, they are in breach of the agreement, but because the contract that you are your spouse both signed supersedes the divorce agreement, the credit card company can still come after you to collect the debt. It’s important to consider possible scenarios like this when dividing debt in a divorce.

Talk to Peeples Law

If you are ready to move forward with a divorce and want to make sure that your interests are protected, the experienced Birmingham divorce attorneys at Peeples Law are ready to help. Contact us today to schedule your own personalized consultation.

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