How Are Property And Debt Divided In A Divorce

Legalby Subham Kamila31 May 2022

How Are Property And Debt Divided In A Divorce

Divorce is itself a tough legal issue.

The property and debt division makes this thing more complicated. After all, the spouses can have different ideas on what is fair, although they are on friendly terms.

When the divorce spouses fail to agree on debt and property division, they are required to go to court and take the help of Family Law Legal Services in order to settle things. Here, the judge will apply the state’s law and then craft a property division order.

There are also some divorcing couples who are able to settle the agreement outside of the course.

How Are Property And Debt Divided During Divorce By The Court?

The burning question that is bound to strike on the head of an individual is, how is debt divided in divorce. Yes, couples tend to overlook it during the divorce process. They are settled based on state law. The courts usually use one or more approaches in order to divide marital belongings and debt. Here, we will talk about those approaches.

Community Property

Here are the names of community property states.

  •       Wisconsin.
  •       Washington.
  •       Texas.
  •       New Mexico.
  •       Nevada.
  •       Louisiana.
  •       Idaho.
  •       California.
  •       Arizona.

Under this particular law, the judge has to classify all of the marital property. The marital property simply refers to the property that is acquired for the marriage. That property can be owned by both of the spouses or can be separate property.

When it comes to the community property, the judge will divide that equally between two spouses. As a result, every spouse will be able to keep their property separately.

On the other hand, some states like Tennessee and Alaska provide a hybrid structure of the community property division. Under this hybrid approach, the couple has the right to agree on treating the marital possessions as community property.

Community property usually includes the following.

  •  All the earned income by either of the spouses during their marriage.
  •  Separate property, which has been integrated with the community property to the point where it can not be split out.
  •  All the items that are purchased with the money of either spouse are earned during the marriage.
  •  All of the debts are incurred during the marriage, even when only a single spouse signed the paperwork for the debt.

Equitable Distribution

In every non-community property state, judges first have to determine what property is actually marital property and what is separate property.

After that, the judge will divide all the property between spouses fairly. It does not have to be equal. The main purpose is to make a fair settlement for both spouses.

Here, by saying division of property, we are not trying to literally mean a physical division. Rather, the court may offer every spouse a certain percentage of the total value of the property. Each of the two spouses will get assets, personal property, and also debts whose worth adds up to a fair percentage.

Usually, separate property involves the following.

  •       Money is held by one spouse, and that too before marriage.
  •       Gifts are made to only one spouse during the marriage.
  •       Property owned by a spouse before marriage.
  •       Received inheritance of one spouse.
  •       Received personal injury awards by one spouse during the marriage.
  •       Pension proceeds which vested before marriage.
  •       Commingled separate property.
  •       Property purchased that has separate funds.
  •       Any business owned by anyone’s spouse before the marriage.

During A Divorce, Who Gets To Stay In House

On the basis of the circumstances, it will be decided which one of the spouses will stay at home. However, the judges will consider who holds the title of the house, but the name on the title is not going to decide who will stay in the house.

  • In case you do not have any children and the house is in the name of a single spouse, and they are living in a community property state, the other spouse can be asked to leave. If the other spouse is able to show that share funds have been used for paying the property, the verdict will be different.
  • In case the house was an acquired property during the wedding, both of them will get an equal share of the house. And no one can ask the other spouse to leave the property.
  • In case you have minor children, the judges always take into consideration what will be the best for the child and often make the decision in favor of the child’s caregiver.

To Conclude

In case both the spouses can agree on the same terms, they can divide the property on their own. But if that is not the case, they should take help from one of the best Family Law Legal Services.

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