Laws in Alabama regarding the division of loans or debt in a divorce are complex. You will probably not find one if you are looking for a one-word answer to yes or no. To whom the debts are allocated depends on their respective contracts. Some other factors the court will consider include the length of the marriage, which parties benefited from the debt, and each spouse’s financial stability.
Given the unpredictable nature of courts dividing the debt, consulting with a divorce attorney near me is recommended. Experienced divorce attorneys will help reach the best possible outcome or settlement based on your rights and situation. The separation process becomes a lot easier when you have a professional by your side.
Debt and asset division in Alabama
Alabama does not follow an equal distribution of debt and assets but an equitable one. This means that the assets and debts are divided fairly among the parties rather than splitting 50-50. Some factors considered during the process include:
- The party responsible for incurring the debt.
- Details surrounding the divorce circumstances.
- Income and assets of each party.
- Earning potential of each party.
- Individual tax burdens for each party.
Since assets are divided equitably, the chances of conflict are higher.
What are marital debts, and what are your personal debts: what’s the difference?
When unmarried, your debt is exclusively your own. Marriage brings about the existence of both personal and marital debt. This is the debt you acquire after coming into the marriage. Debts acquired before the marriage must be paid by the party responsible. On the other hand, debts acquired after the coming must be paid by both parties.
There are certain exceptions to this rule.
If you sign a debt contract where your spouse names you as a surety, you become equally liable for the debt. A surety is a person who may not have acquired the debt but promises to be liable for its payment. This can apply even when you are not married. This is essentially co-signing a debt contract.
Important details to remember
Here are some additional pieces of information that individuals going through a divorce should remember:
- Credit Cards: Even though a credit card is in one spouse’s name, the debt incurred during the marriage through the credit card becomes a responsibility for both of them.
- Marital Debt: Sometimes, spouses might hide some debt from their partners. These include gambling losses, shopping sprees, student loans, etc. Even if you did not know about your spouse’s debt, as long as you were married, you must share the debt.