Dividing debt in a divorce can feel overwhelming, but understanding Tennessee’s approach can simplify the process. The state follows an equitable distribution system, meaning the courts divide debts fairly, but not necessarily equally. The courts consider various factors to determine how marital debts should split between spouses.
Marital debts
Debts acquired during the marriage typically count as marital debts, regardless of whose name appears on the account. This includes things like credit card balances, mortgages, car loans, and personal loans. Even if one spouse took out the debt without the other’s consent, the court may treat it as a marital debt if it benefited both spouses or was accumulated for family needs.
Separate debts
Debts incurred before the marriage usually count as separate debts and don’t divide during a divorce. However, if separate debts mix with marital assets or if one spouse assumes responsibility for a separate debt during the marriage, the court may treat it as a marital debt. Additionally, if one spouse carries significant personal debt that affects the couple’s finances, the court may factor it into the division process.
Factors that influence debt division
State courts consider several factors when dividing debt. These include the length of the marriage, the financial situation of both spouses, and who is responsible for certain debts. If one spouse has a higher earning potential or is better equipped to pay off a debt, the court may allocate a larger share of the debt to that spouse. The goal is to ensure fairness based on each party’s ability to pay and financial circumstances.
The impact of debt division on divorce settlements
The way debts divide can influence the overall divorce settlement. In some cases, one spouse may receive a larger portion of assets in exchange for taking on more debt. This strategy helps balance the overall financial responsibilities. It’s important to consider how this division will affect your future finances.
State law strives to ensure a fair distribution of both assets and debts, allowing both parties to move forward after the divorce.