A guide to debt, credit cards and debt in a Rhode Island divorce by Rhode Island divorce attorney David Slepkow
Does Rhode Island have a statute directly pertaining to Marital Debt?
Rhode Island has no specific statute related directly to assigning Marital Debt in a Rhode Island Divorce. Theoretically, issues concerning Marital Debt are determined under the RI Equitable Division Statute RIGL 15-5-16.1. If the matter goes to a full trial on the merits, which is unlikely, the judge must rely on the equitable division statute 15-5-16.1 to determine assignment of assets as well as debt. Please contact a Rhode Island Divorce Lawyer / Attorney about your RI Divorce case. All debt incurred by husband and wife during the Course of the marriage constitutes marital debt. Debt incurred prior to the marriage is the responsibility of the person who incurred the debt.
How is marital debt actually divided in Rhode Island Divorce?
How is marital debt actually divided in Rhode Island Divorce? That is a very difficult and complicated question. There is no clear answer. The answer can only be determined by analytical reasoning. As a practical matter, assignment of marital debt is usually negotiated by the parties during the course of the divorce without the necessity of a trial. This article should be used for informational purposes only and not as a substitute for obtaining a Rhode Island Divorce lawyer. Judges tend to look at the following factors when determining assignment of marital debt:
What is one factor that Judges look at in determining who should be responsible to pay debt?
1) The court looks at whether the debt was incurred in furtherance of the Marital Partnership. Marriage is a partnership. If the debt was used for home goods, groceries, clothes, family vacations, medical bills etc. then the Court is more likely to divide the debt equitably between the parties.If the debt was incurred by either husband or wife in furtherance of his or her own agenda then the debt is more likely to be assigned to the person who incurred the debt. For example, gambling debt, debt used in furtherance of an affair or unreasonable debt incurred without the consent of the other spouse is more likely to be assigned to the person who incurred the debt. This type of debt is theoretically "marital debt" although it is inequitable for the other spouse to have to pay. For example, gambling debt should be paid by the spouse who lost the money at the casino.
What is another factor that is important?
2) Who will have title and / or possession of the goods or items for which the debt was incurred? This is a significant factor. If the husband purchased a flat screen television on his Mastercard and he will get the flat screen then it is more likely that he will be assigned that debt.The person who is assigned the vehicle/ boat will usually be responsible for the debt which secures the automobile / car / boat. As far as real estate is concerned, the person who is assigned the real estate will usually be responsible to pay the mortgage, taxes and insurance for the property. This can get more complicated if a home equity line was used to purchase an asset which will be titled in the name of the spouse who is not assigned the real estate.
What else is important in determining the equitable assignment of Marital debt?
3.) What is the earning capacity, assets and ability of the parties to repay the debt? If one spouse has significantly higher income or earning capacity in the future then the other spouse then that spouse may be ordered to pay a larger share of the marital debt. This is a very practical determination since it makes no sense to assign debt to a person who cannot afford to repay it. Sometimes neither party can afford to repay the debt.In some cases the parties decide to file a Joint Bankruptcy Petition. In some Rhode Island divorce cases, one spouse files for Bankruptcy and the other does not file. The effect of Bankruptcy on Court orders and obligations in the property settlement agreement is beyond the scope of this article.There may also be a foreclosure of the marital real estate or the parties may agree to a short sale. Foreclosures and short sales are also beyond the scope of this article. Please consult with a Rhode Island Bankruptcy Attorney.
Is fault a factor in determining assignment of Marital debt?
4.) Who is at fault for the breakup of the marriage? If one spouse had an affair, abused alcohol or drugs or was physically abusive then that spouse may be ordered to pay a larger share of the debt. Cheating on your spouse could carry a penalty of being responsible for a larger share of the marital debt
Does it make any difference if the debt is in the husbands or wives name?
5.) Is the debt in the husband or wives name or is it joint debt? This is a very practical determination. Judges may be more likely to assign certain debt to a spouse who is the "obligor". (In that person's name) The justification for this is simple. The Obligor has an independent legal obligation to repay the third party creditor.If both parties have an equal amount of marital debt in their name then the easy answer may be assigning to each party the debt in their own name. If one spouse has a disproportionate amount of debt in their own name then the Court could order one party to make periodic payments towards the debt to the other. The Court could also order certain property to be sold and the debt paid.
What happens to joint debt?
Joint debt is an even more perplexing issue. Joint debt means debt that both spouses owe the debt to a third party creditor. This is typically credit card debt, real estate mortgages, vehicle debt, store credit cards. If the Court assigns joint debt to one spouse, the other spouse must be vigilant to make sure that the debt is actually paid on a timely basis.
Does assignment of Debt in a Divorce in RI Family Court affect the legal obligation to repay the creditor?
Even though the Rhode Island Family Court may assign joint debt, this assignment does have any effect on the legal obligation of either spouse to repay the debt to the third party creditor. Credit Card companies such as Mastercard, Visa, Chase, Wells Fargo and American express do not care what some state Family court Judge orders. All they care about is whether they get their money back with interest. The person who signs a promissory note or debt agreement is responsible for that debt Vis a Vis the third party creditor. This obligation is irrespective of any Rhode Island (RI) Family Court order or property settlement Agreement.
What can be done if payment is not made by a spouse ordered to make payments?
If one spouse is assigned certain debt and does not make payments or does not make payments on a timely basis then that conduct can wreak havoc on the other spouses credit rating. This is especially the case if failure to pay the debt results in foreclosure, lawsuits or repossession of the car/ automobile. If payments are not made pursuant to Court order or a property settlement agreement then the other spouse can seek relief in Court with a contempt motion or a motion to enforce the property settlement agreement. It makes little to no sense to assign debt to a spouse who has no income or ability to repay the debt because the assignment will actually harm the other spouse because their credit may be severely harmed.
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