Americans are voracious consumers of secured and unsecured debt. We rack up student loan debt, get car loans as well as contend with mortgage payments and credit card bills. Surveys have found that the average American family with at least one credit card has somewhere near $16,000 in credit card debt. The problem for divorcing couples in 
Tennessee is how this debt is ultimately divided. The general rule in an equitable division state like Tennessee is that debts incurred during the marriage for marital purposes is marital debt, regardless of whether it’s listed jointly or in only one spouse’s name. The operative word being debt incurred during the marriage; debts acquired prior to marriage aren’t considered joint liabilities.
Tennessee statutes do not define any difference between marital and separate debt, nor do the statutes offer any advice about separating the debts a married couple may have accumulated during the marriage. However, in 2003 the Tennessee Supreme Court clarified this issue in Alford v. Alford. In this case the Court determined that, if possible, it will assign a debt to the spouse who receives the asset acquired by the debt by considering the following four factors:
- The debt’s purpose;
- Which party incurred the debt;
- Which party benefitted from incurring the debt; and
- Which party is best able to repay the debt.
What Do I Do After The Divorce?
If you have any joint credit cards you will most likely want to ensure that they are closed out entirely when you separate. Before this can happen, the bank will usually require that the balance be paid off, something that can be taken care of in the divorce settlement agreement. It is critical that any joint credit card accounts be shut down to avoid all future charges once the marriage is over. Failing to do so could result in numerous problems if your spouse goes on a spending spree using a card that you have signed onto, even if you are no longer married, as you could still be held legally responsible for the debt.
Divorce and debt are obviously complex issues one must take seriously as it can have a lasting effect on one’s credit worthiness as it relates to the ability to buy a car, qualify for a mortgage or simply be in good standing with banking institutions. An experienced attorney like Donna Wagner can guide you through such complexities and fight for you in obtaining an equitable solution to your divorce. Contact Mrs. Wagner today to set up a consultation.
