In our last blog, we talked about the nature of assets; and in fact, many separated spouses want to focus on division of assets. But what about debt?
Prior to July 1, 2011 the Virginia Code did not specifically address the classification of debts as martial or separate as it defined the assets of the parties, and the presumption was that all debt acquired during the marriage was marital debt.
Beginning July 1, 2011, Section 20-107.3(A) specifically addresses the classification of debt and provides that the court must determine whether the debt is marital or separate, and provides the court with definitions of what those classifications are and the presumptions the Court must use when determining how the debt should be treated. The statute now provides that the Court has the authority to find a debt separate debt, even if incurred during the marriage, if it can be proven that the debt was incurred for non-marital purposes.
Debts that particularly can create areas for dispute and discussion include credit card debts, student loans and personal loans because often those funds are used for a variety of purposes compared to first mortgages or car loans whose purposes can sometimes be more clearly determined.