Most people know that they will be expected to split marital property in their divorce. In Rhode Island, marital property includes anything of value that is purchased, improved, or accrued during the marriage, and that is not categorized as separate property due to a preexisting postnuptial or prenuptial agreement. However, a good number of divorcees in Rhode Island are surprised to find that they also need to divvy up their marital debt as well.
How Debt Division Works in Rhode Island
The state of Rhode Island considers debts owed to be an asset, albeit a negative one. Under its property division rules, the negative asset must be divided in a divorce, given that it is considered marital. Debt becomes marital just as any other piece of property, as in it is marital if it is first accrued while the spouses are married. If a debt is started before or after a marriage, it should be considered separate property and should not be divided between the spouses.
Property division in Rhode Island is controlled by equitable distribution rules. Do not be mistaken by the name – equitable does not mean equal. Instead, it means to divide property by what is “fair” in the eyes of the court. This equitable approach to debt division can actually be a boon for spouses who tried to be fiscally responsible during marriage.
Example of Equitable Debt Division
Imagine a high net worth divorce scenario in which Joe buys a sports car by placing it on a joint credit card shared with his spouse, Morgan. Joe, who wanted, chose, and bought the car, was the only one who drove it, as Morgan had a car to use already. While there is still $10,000 of debt on the credit card for the vehicle, the couple decides to divorce.
Even though both spouses technically own the car, Morgan never felt real ownership over it. If this can be explained to the court – and possibly backed by evidence of Morgan’s lack of use of the sports car – debt division might not be 50-50 but something along the lines of 20-80 instead. In this scenario, $8,000 of debt goes to Joe, who wanted and used the car, and $2,000 goes to Morgan, as it is assumed there must have been some benefit of owning the car for both spouses.
Protecting Your Finances from the Debt of Your Spouse
Although the aforementioned example of equitable debt division in Rhode Island is certainly possible, the truth is debt and property division is often far more complex and intricate. Navigating the situation without the guidance of an experienced debt division lawyer can jeopardize your hard-earned finances, as you might end up with more than your fair share of marital debt. If you are going to file for divorce or are already in the midst of one, you should connect with McIntyre Tate LLP and our Rhode Island family lawyers today.
For more than 30 years, we have been a staple in communities throughout Rhode Island, providing our 150+ years of collective legal experience whenever called. To schedule your own consultation with our Rhode Island divorce attorneys, contact us by calling (401) 351-7700 and letting us know what is going on in your life that needs our professional representation.