Shared Debt of Spouses. How are spouses' debts divided in a divorce? Division of Spouses' Debt in...
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Today we'll discuss recognizing spouses' debts as joint. Which debts can be recognized as joint and subject to division, and which will remain the sole responsibility of one spouse. So, when dividing property, spouses often request that various loans taken out jointly or by one of them during the marriage also be divided.
While dividing a mortgage loan is fairly straightforward, since such a loan is taken out to purchase an apartment, which the spouses also declare for division, dividing other loans can present significant challenges.
Family law allows for each spouse to have their own obligations.
For example, if one spouse enters into a loan agreement or credit contract, the court will recognize such debt as jointly owed only if the funds were used for family needs and with the consent of the other spouse.
In this case, the spouse claiming the debt must prove that the borrowed money was spent on the family.
Among other property, spouses are dividing a car purchased with a loan in court. The loan was taken out by one spouse and repaid independently after the divorce, or during the marriage, but after the actual termination of the marital relationship. (The actual termination of the marital relationship must also be proven, but this is a separate topic and will not be covered in this video.)
The spouse who repaid the loan has the right to request the court to collect monetary compensation from the other spouse in the amount of half the amount they paid on the loan after the divorce or termination of the marital relationship. And, most likely, the court will order such compensation because the loan was specifically intended for the purchase of a car claimed for division.
However, obtaining compensation for a consumer loan paid by one spouse for a non-targeted purpose arises.
A fairly common situation: during a marriage, when family ties are still strong and the partners love and trust each other, financial difficulties arise. The spouses decide to take out a consumer loan and, for example, register it in the wife's name.
For a while, the loan is repaid from joint funds, but then the relationship deteriorates, and the marriage breaks up.
The spouse in whose name the loan is registered is already making payments on the loan independently and, when dividing the property, requests that the debt be recognized as joint and that the ex-spouse be obligated to compensate them for half of the loan repayments.
However, the ex-spouse is reluctant to agree to this option, declaring that this is the first time they've heard of the loan, have never seen the money, and therefore owe no one anything.
The person in whose name it is registered will have to prove that the loan was used for family purposes. It's favorable if the loan agreement period coincides with the acquisition of some expensive property or payment for services or work.
For example, if the day after the loan was received, a vacation package for the spouses was purchased for approximately the same amount, or renovation work was paid for a shared apartment, the chances that the court will award compensation to the woman are quite high.
However, if no major purchases were made, or the loan was received during a different time period than the property purchase, and there is no evidence that the spouse knew about and consented to the loan, unfortunately, it will be impossible to recover the money from the dishonest party.
Therefore, in order for the court to recognize the loan debt as jointly owed and to recover half of the funds paid after the divorce/dissolution of the marital relationship from the other spouse, it is necessary to prove that:
the other spouse knew about the loan and consented to it;
and most importantly, that the funds were spent on family needs. In addition to providing evidence, such as the purchase of expensive property, you can provide income statements from the spouses, which show that the family did not have sufficient funds to purchase such property.
I understand that collecting and storing receipts is quite difficult, but it's better to make this a mandatory rule.
Also note that the court's recognition of a debt as joint does not create any obligations for the other spouse to the bank. This means that the spouse who received the loan will still be obligated to repay the bank loan.
Recognizing the debt as joint and distributing shares in this debt is done to grant the spouse the right to collect funds from the other spouse after the debt is repaid.