Debt is an influential feature of the modern financial landscape. Few households can maintain a comfortable standard of living without taking on some degree of debt. Mortgages and car loans are necessary debts that households often cannot avoid, for example.
People may also have student loans taken on in an attempt to increase their earning potential and debts related to revolving lines of credit, such as credit cards. Other people may end up facing huge medical debts if they develop cancer or debilitating injuries. Given the ways in which debt affects many areas of life, it is perhaps unsurprising that it can significantly impact a couple’s divorce process as well.
Debts often cause divorce
Poor financial management, failure to disclose spending habits and differing priorities can all be reasons that people choose to file for divorce. The debt that someone accrues during marriage, particularly if they create new debt without discussing it with their spouse first, can cause resentment and financial challenges that strain the marital relationship. Financial dishonesty and a misalignment of financial priorities are both among the more commonly-reported economic reasons that people file for divorce.
Debts affect property division
Married couples usually share their houses and their finances, which means they will have to separate their resources and obligations when they decide to divorce. The law in Connecticut requires an equitable distribution of the marital estate. The estate includes not just the assets that the spouses acquired during marriage in the income that each of them earned but also the debts that they have taken on as a household. Debt can therefore have a major influence on the outcome of property division. How the courts divide debts can influence how they divide assets and also what they do with financial support.
Debts can reflect marital misconduct
For the most part, judges look at when people took on debt to determine if they will have to divide it when they divorce. Financial obligations accrued during the marriage with the intention of supporting the family unit are typically subject to division. Debts from before the marriage or after the separation of the spouses will usually be separate property. Additionally, debts accrued maliciously or as part of behavior that damaged the marital relationship, including adultery, may not be subject to division. To exclude specific debts from the divorce, spouses will usually need to have documentation affirming their claims that the debt existed prior to marriage or was the result of significant financial misconduct.
Understanding the role of debt in a Connecticut divorce may help those thinking about their financial future better estimate what they can anticipate during the property division process.
