Division of Debt in Tennessee Divorce

How Will Your Debt Be Divided?

In any divorce, the couple, often with the intervention of the courts, must divide between themselves the assets they own. However, Tennessee divorce law also requires that debts held by a married couple must also be divided in a divorce.

As with the division of assets, division of debt in Tennessee, divorce is not meant to be equal, but fair. A divorcing couple negotiating a division of debt, or a court deciding an equitable distribution of marital debt, must consider numerous factors in determining how debt should be divided between spouses.

What Happens to Debt When a Couple Divorces in Tennessee?

What happens to debt in Tennessee divorces depends on whether it is classified as marital debt or non-marital debt. While marital debt is divided between spouses, non-marital debt is not divided and remains the responsibility of the spouse who owes it.

Non-marital debt often includes liabilities that were accrued before the marriage or after the couple separated. Courts or parties may also consider debt to be non-marital even if it was incurred during the marriage but was only incurred by one spouse and not for the benefit of the household or family. However, most debts incurred during the marriage will be classified as marital debt subject to division.

The parties may decide how to divide their marital debt between themselves according to a settlement agreement, which the court can incorporate into the parties’ judgment of divorce (rendering the settlement agreement an enforceable court order).

If courts are called upon by divorcing couples to divide marital debt, they will try to divide it in a way that is fair to both parties. This means that debt may not be divided equally between spouses. Also, if specific assets with obligations attached to them are awarded to one spouse in equitable distribution, courts may often make that spouse responsible for paying the debt, even if it was previously only in the other spouse’s name.

How Do Courts Handle Debt in Tennessee Divorces?

As a starting point, courts handle marital debt in Tennessee divorces by treating them as the shared responsibility of both spouses. However, courts will often shift responsibilities for obligations between spouses based on numerous factors, including:

  • The purpose of the debt — debts incurred solely to support the family or household are more likely to be divided more evenly between spouses
  • Whether the debt was incurred by one spouse individually or by both spouses jointly
  • Who benefitted from the debt
  • The respective financial means of the parties to pay the debt, or which party is in the best financial position to pay the debt
  • Whether the debt is attached to a specific asset (such as a car or a house) and which spouse has been awarded that asset in equitable distribution
  • Other factors, such as fraud or infidelity by a spouse

Debts that are in both spouses’ names will often be divided between both spouses by the court. Even if a debt is in only one spouse’s name, it will usually be divided between both spouses by the court if the court finds that the debt was incurred for the benefit of the couple, family, or household.

For example, a credit card held in one spouse’s name that is used to purchase the household’s groceries can have its balance divided between the spouses.

Courts can also sometimes divide debts that would appear to be the responsibility of only one spouse.

For example, if a spouse goes back to school and takes out student loans, the court may decide that the loan balances can be divided between both spouses if the other spouse or the couple’s family benefitted from the debtor spouse going back to school (such as if the debtor spouse was able to obtain a much higher paying job that allowed the other spouse to become a homemaker or stay-at-home parent).

How Is Joint Debt Handled?

When dividing debts in Tennessee divorces, it is essential to remember that divorce does not legally affect who has an obligation to pay a joint debt or debt that is in the names of both spouses.

Even if one spouse agrees to pay a jointly held debt or is ordered by the court to pay a jointly held debt, if that spouse fails to pay the debt, the other spouse is still legally liable to the creditor for the debt.

Although you might be able to obtain damages from your spouse or ex-spouse for his or her failure to pay joint debts they were obligated or ordered to pay following your divorce, you might be left with severely damaged credit if joint debts go unpaid.

When going through the division of debt in a divorce, you should conduct a credit check on yourself to ensure that you have included all obligations that are in your name (and make sure that your spouse has not taken out other debts in your name that you were not aware of).

You should also monitor all joint accounts you may have with your separated spouse, such as jointly-held credit cards, to ensure that your spouse isn’t accumulating significant debt in your name without your knowledge.
Finally, when you divide debts in a divorce, it may be best to divide active joint debt accounts between yourself and your spouse and remove each other from the accounts you each hold so that all accounts are held in only one person’s name following a divorce.

Contact Attorney Shannon A. Jones to Schedule a Free Consultation

If you are considering or in the middle of divorce proceedings and have debts to divide between yourself and your spouse, you need experienced legal representation to help you document your family’s debts and to advocate on your behalf to ensure that these debts are divided equitably between yourself and your spouse.

A dedicated, knowledgeable divorce attorney can ensure that your marital debts are settled in a way that ensures you only pay your fair share of the debts from which you benefited and for which you have the financial resources to afford.

Contact Tennessee family law attorney Shannon A. Jones at (901) 562-3605 today to schedule a free consultation to learn more about how Attorney Shannon A. Jones can help ensure that you receive a fair and reasonable division of debts in your Tennessee divorce.