Who Pays the Debt in a Divorce in Kentucky?
By Beverly Bird
Married people incur debt as a matter of course. They purchase homes and automobiles. They take out credit cards for emergency expenditures or luxuries. These balances don't go away if they divorce. One spouse – but usually both – must still pay them. Kentucky law divides debts between divorcing spouses in a fair and equitable way, not necessarily 50/50. You have a right to come to your own agreement regarding payment, and a Kentucky judge will probably approve it unless it's grossly unfair to one of you. Otherwise, you'll have to let the court decide.
Marital Vs. Separate Debt
Kentucky is an equitable distribution state, so no exact formula exists in its statutes for dividing either marital assets or debts. Courts are not required to divide everything 50/50; the state's code gives judges a lot of discretion in determining which spouse pays for what. The court's first challenge is to identify whether each specific account is marital debt or separate debt. It doesn't matter whose name is on the account. If the debt meets a variety of factors, a judge can consider it marital, meaning both of you owe it. Debts incurred before you married are typically the separate responsibility of the spouse who opened the account.
Division of Marital Debt
Kentucky judges take several factors into consideration when deciding whether to classify a debt as a marital obligation. One factor involves who enjoyed or benefited from the purchase or acquisition. If you financed a refrigerator for you home, it's probably marital. If you financed a trip to Europe, but you went alone and your spouse stayed home, it's probably your separate debt. Other factors include whether one of you took on the debt without the consent or knowledge of the other, and how capable you are of repaying it based on your income post-divorce.
Just as debts taken on prior to your marriage are typically the separate responsibility of the spouse who incurred them, Kentucky courts draw a line regarding debts incurred post-separation as well. Separation can mean that you and your spouse moved to separate residences, you signed a separation agreement, or one of you filed for divorce. Typically, any debts taken after this time are the separate liability of the spouse who contracts for them. However, exceptions might exist if the debts relate to necessary living expenses before the divorce is final, particularly if the expenses benefited your children.
It the court assigns certain debts to your spouse for payment, this doesn't necessarily protect you against creditors if the accounts are in joint names. Divorce law and consumer law are two separate things. A divorce decree does not bind your creditors. It doesn't supersede the contract you signed with your creditor, agreeing to repay a loan. The creditor can come after you for payment, even if your decree or marital settlement agreement assigns responsibility for payment to your spouse. If your spouse doesn't pay, the delinquent history will appear on your credit report. If you have to make the payments yourself to protect your credit history, you can usually take your ex back to family court to enforce the terms of your divorce decree. Typically, the court would order your spouse to reimburse you. You can also go back to court to enforce the terms of your decree if you don't make payment yourself.
Beverly Bird is a practicing paralegal who has been writing professionally on legal subjects for over 30 years. She specializes in family law and estate law and has mediated family custody issues.