Debts and liabilities must be divided and assigned to each spouse during a Tulsa, Oklahoma divorce. In the state of Oklahoma, courts use the concept of “equitable division” to divide both assets and debts. The most important step the court takes is determining whether a debt is marital debt or separate personal debt. After this determination, the court will then decide about debt assignment divorce using the elements of the equitable distribution doctrine.
Marital Debt Assignment
The gold standard that defines marital property in Oklahoma is property acquired after marriage and before separation. The property, or debt in this case, includes all property that is obtained during marriage regardless of title, and is presumed to be marital property that is only rebuttable by evidence presented by the objecting party.
As is common in many broadly construed divorce doctrines, the court has broad discretion in determining how any debt that is jointly acquired should be distributed. The court also has broad discretion to determine the method in valuing the debt, the impact on the party it is potentially assigned the debt, and the overall impact and value of the debt to the party.
Separate Debt Assignment
The definition of separate debt is debt that was obtained before marriage by one spouse, continues to function as separate debt during the marriage, and does not comingle with marital assets. If a spouse uses salary earned during the marriage to pay for the separate debt, this could possibly be considered comingling and be transmuted to marital debt.
Similarly, if the debt, for example a credit card, is used to pay for marital assets, this too can be considered comingling of a separate previous debt. Debts become comingled when the debt becomes so confused, blended, and intertwined with marital property it becomes impossible to understand the nature of the debt any longer.
The main categories of separate property or debts includes inheritances, gifts, or anything acquired during marriage using separate funds. A major debt that is often overlooked as separate property, which is the sole responsibility of the party that acquired the debt, is student loan debt for education.
Equitable Debt Assignment Divorce
Approximately 75% of Americans own at least one credit card with an average balance of $6,375, and about 65% of Americans own their own home but owe money in the form of a mortgage. Debt is widespread and a serious consideration when a couple chooses to divorce.
Although one of the first considerations couples make when divorcing is how property is divided, how bills and debts are divided is equally a concern. The court will take into consideration the bills that the couple has paid jointly and assign the debt based on the concept of equitable distribution. This concept means the court will divide debts fairly; however, that does not mean equally. If one spouse receives a greater amount of assets, they also might be subject to a greater assignment of debts.
Often if a spouse is assigned a car that they typically used during the marriage, the car payment, if one exists, will be assigned to that party. Credit cards primarily used by one spouse will generally be assigned to that spouse, unless the assignment of the debt is unjust. For example, if a homemaker was provided a credit card for home expenses, grocery, bills, child care, etc., but the other spouse typically made the payments on the credit card, the court will have to consider the fairness of assigning major debt to a party who may have trouble with future employment after the divorce is final.
The major factor the courts employ is to ensure that both parties are supported and not penalized as a result of the divorce. Often alimony is assigned to make up for the assignment of debt to a spouse who does not initially have adequate financial resources.
Free Consultation with a Tulsa Divorce Lawyer
Being faced with the possibility of insurmountable debt or the idea of making major payments when you haven’t been employed during the marriage can be overwhelming. Going through the divorce process is difficult enough; being able to reach a compromise without having to appear in court or hiring an attorney who can expertly represent your side can minimize additional conflict.
By hiring a family law attorney to advocate on your behalf and facilitate helpful communication with your soon-to-be ex-spouse, you will have a greater chance of compromising and choosing how to assign debt without having to appear in court.
Contact an experienced Tulsa family law attorney for help with child custody and expert representation for your divorce.
For a free confidential consultation, call 918-924-5526 today.
