Who Gets the Debt in an Alabama Divorce?

When divorce is represented on TV or in movies, it usually glorifies the divvying up of belongings between the separating couple.

The reality is, a divorce is painful enough, and most who experience it don’t wish to extend the process with fights over who gets to keep what. However, one area that often results in conflict, is the assignment of debts. Many couples going through an Alabama divorce today come to the table with more debts than assets. 

In the state of Alabama, neither property nor debts are approached as a 50/50 split. Rather, Alabama identifies as an “equitable distribution state.” This means that left up to the courts, the division of assets (property) and liabilities (debts) should be fair and equitable. Although, “equitable” does not necessarily mean equal. Rather, it reflects what the Circuit Court deems to be fair.

Whose Is Whose in An Alabama Divorce?

When it comes to the division of property, the courts typically look at the length of the marriage, first. In a shorter-term marriage, each spouse is generally given essentially what he or she came into the marriage with, according to Alabama Code § 30-4-1. Whatever value that was collected or purchased during the length of the marriage is then divided up between the two.

If the marriage was longer-term, the process can get a little more complicated. Judges have much more discretion as to how to divide property and debts, and thus must take more of the particulars into consideration. These considerations could include who contributed the most on the front end and who needs the most assistance at the time of the separation. 

Knowing the elasticity of the bounds of the division of property in an Alabama divorce, it is highly recommended that couples retain divorce attorneys who are able to present the case of their client clearly and who are well-versed in the long-term implications of both debts and property that is assigned (i.e., the tax impact of selling any particular asset).

Know What You Need to Know

One of the first pieces of the division of debts puzzle that you should seek to get in order is knowing what exists. Being caught off-guard by a spouse who may have been less than forthright about his or her debts can be a shock to an already over-stressed system during divorce proceedings. This is why you must be aware of the debts that are genuinely yours and where you stand with credit cards, mortgages, loans, etc. 

It is recommended that you take advantage of accessing FREE credit reports provided by all three credit reporting agencies, like the one found at AnnualCreditReport.com.

Firmly Draw a Line

At this point, you will want to avoid making the debt balance any worse. The best way to accomplish this is to call the numbers on the backs of your credit cards and cut them off. The existing debt will still need to be dealt with, but this decisive action removes the opportunity for additional purchases to be made.

Realize this action will effectively cut off yourself, along with your spouse, on jointly held accounts. It is highly recommended that you communicate with your spouse that this action is being taken so that it does not create unanticipated complications. 

Most spouses choose to cooperate with each other through these proceedings (contrary to the media’s portrayal!). It may be helpful to establish a working arrangement regarding designated lines of credit or establish firm limits on spending that may remain available.

Protect Yourself

When it comes to proceeding with an Alabama divorce, as much as it lies within you, it is best for you and your spouse, along with your respective attorneys, to work together to create an amenable solution regarding the division of your debts.

A judge may or may not take all the moving parts and pieces into account when apportioning arrears. For this reason, and purely for simplicity’s sake, you should consider the following options related to paying debts:

• Agree to pay them off right away. (The best option!)
• Agree to take responsibility for the debts in exchange for more assets to compensate you.
• Agree for your spouse to take on the debts and then allow him/her more assets to compensate them.
• Agree to divide the debts and assets equally. (the worst option!)

The reason for equal division of debts and assets is the worst option is that until both parties’ portion of the debts is paid off, you remain vulnerable. Alabama divorce proceedings will typically not protect you in the event of a third party’s interference in the indemnity agreement. 

Even with some kind of indemnity agreement that indicates your spouse’s agreement to hold you harmless for the repayment of the debt, as long as the debts remain, you still remain at risk.

Protect Your Credit After Divorce

While the divorce itself won’t hurt your credit, there are some aspects of the process to be aware of to protect your credit. Divorce decrees do not reach creditors, so they are unaware if you are no longer responsible for a certain credit. This is why it is so important to pay off debts before the divorce is finalized. You do not want creditors coming after you for debts you are no longer responsible for. 

In order to protect your credit during a divorce, you may need to take some precautions. These include: 

• Close joint accounts as soon as possible: No matter how a joint account is distributed in a divorce, you and your ex-spouse could still both be held responsible. Any accounts that are left open could be used by your ex-spouse to create more debt and possibly miss payments. This account will continue to affect the credit score of both people who were on the account. 
• Inform creditors about your divorce: Any lenders, banks, or credit card companies you used where you had a joint account should be aware of the divorce. Revoke any authorization from the other person so they cannot add any debt to these accounts. 
• Maintain current spending habits: Do not add a significant amount of debt for frivolous purchases. Make sure you use any credit cards you have wisely before, during, and after the divorce. After everything is settled, you may still be responsible for a large amount of credit card debt, and you want to be sure you can pay on time to keep your credit score from falling.
• Freeze your accounts: If your ex-spouse has been using credit cards to increase debt before the divorce, you can put a freeze on your accounts. This can ensure you will not be liable for these debts after the final divorce judgment. 
• Continue receiving monthly statements: If a credit card stays open, it is important to continue reviewing the monthly statements. If you are in charge of this debt, make sure your ex-spouse is not continuing to spend on this card. If your ex-spouse is responsible for this debt, make sure they are paying the monthly payments on time. 

At Charlotte Christian Law, We Will Advocate For a Fair Divorce Settlement

The attorneys at Charlotte Christian Law know that a divorce can be a complicated and emotional process. We always want our clients to be better off after working with us. Our attorneys have saved our clients millions of dollars in divorce settlements. We will work hard to protect you from an unfair divorce. Benefits of choosing Charlotte Christian Law include: 

• We will be your legal advocate and represent you caringly. 
• We will guide you through the process of allocating debts and advise you on where to make compromises during settlement proceedings.
• Our attorneys focus on family law and have handled similar cases in the past regarding how to split the debt in a divorce. 

Throughout the entirety of your divorce proceedings, we will take care of the legal matters so you can focus on moving on. We will be by your side every step of the way so you feel supported and confident in the decisions you are making for yourself and your family. 

Don’t Go It Alone

Sometimes you and your spouse may not agree on the distribution of the marital assets and the impact of debt that you could become responsible for during and after the dissolution of your marriage may be severe. However, with the right divorce attorney on your side, we can help you navigate this tough time so that an equitable result can be achieved. 

You don’t have to try to carry the burden alone. Contact us for a consultation with our legal team to evaluate your situation and develop a plan to move you forward.