If you are filing for divorce it is important that you understand your rights and the legal process, especially when it comes to how joint assets and debts are handled. Work with a skillful Montgomery County property division lawyer for legal advice and representation.
What Are Joint Debts?
A joint debt is a financial liability for which two or more parties share responsibility. In a marriage, most of the debt incurred by either party throughout the legal relationship is shared, like mortgages, credit card balances and debt, personal loans, medical bills, etc.
When two spouses share joint debts, they are both responsible for paying back the money owed. In most cases, both spouses’ names will be listed on the account. However, even if only one spouse incurred the debt there is a chance that the other party could be held liable for payments. Any debt accumulated during the marriage can be considered marital debt regardless of who acquired it.
Is Pennsylvania an Equitable Distribution State?
Yes, Pennsylvania is an equitable distribution state. An equitable distribution state is one where, during a divorce, marital assets are divided between the two spouses in a way that is both fair and equitable. This is different from a community property state where assets are split in half and both parties receive 50% of the marital property.
Instead, equitable distribution ensures that a judge evaluates the details and circumstances of the relationship and individuals to determine what a fair distribution would be. This process ensures that the divorce does not leave one spouse destitute or at a severe financial disadvantage.
How Are Joint Debts Handled in a PA Divorce?
Equitable distribution applies not only to marital assets but also to marital debts. During a Pennsylvania divorce, joint financial liabilities are divided equitably between the spouses. If debt division is decided in a court, the judge will consider various aspects before determining which individual should be held liable for which debts. Courts are responsible for determining the value of marital debt and dividing it fairly.
They may consider the following and more.
- Who incurred the debt
- The intended purpose of the debt
- What the debt was used for
- Who benefited from the debt
- The income and financial situation of each spouse
- The earning capacity of each spouse
- The length of the marriage
- Prenuptial or postnuptial agreements
The above and more can impact the outcome of debt division. For example, suppose one spouse has a gambling addiction and they accumulate thousands of dollars of debt. A court may determine that the spouse who incurred the debt should have to bear the responsibility of paying it back as they used marital funds to go into debt and it had no positive effect on the other spouse or family.
In another instance, if one spouse incurred some credit card debt but they have a significantly lower income than the other, the other spouse may be responsible for paying the debt but be awarded additional assets in exchange.
The specific way that marital debts are handled depends on the details of the relationship. For more information contact an experienced divorce attorney today.
