In an earlier blog about marital property, I mentioned that South Carolina is an equitable apportionment/distribution state. But before the distribution takes place, marital assets and debts must be identified. So, if you are going through a divorce (or planning for one), it is equally as important to know your debts as it is your assets.
What are marital debts?
If a debt has accrued during the marriage, it is presumed to be marital debt; however, it is a rebuttable presumption. Along the same lines, there is a rebuttable presumption that a debt of either spouse incurred prior to the beginning of marital litigation is marital and must be factored in the totality of equitable apportionment. Thompson v. Thompson, 377 S.C. 613, 661 S.E.2d 130, 136 (Ct. App. 2008). Therefore, when a debt is proven to have accrued before the commencement of marital litigation, the burden of proving the debt is non-martial rests on the party who makes such an assertion. Schultze v. Schultze, 403 S.C. 1, 741 S.E.2d 593 (Ct. App. 2013).
In other words, if the debt is accrued during the marriage and before the filing of the divorce or separate maintenance and support action, it is presumed to be a marital debt. So, if you want to argue that a debt is non-marital, you have the burden of proving it is non-marital. For example, one argument in establishing presumed marital debt is non-marital is if your spouse incurred the debt without your knowledge. Again, from the judge’s bench: “If one spouse is unaware of debts that were incurred by the other spouse, this can be considered by the family courts as evidence that the debts were not incurred for the joint benefit of the parties”. Grumbos v. Grumbos, 393 S.C. 33, 47, 710 S.E.2d 76, 84 (Ct. App. 2011).
If one spouse takes out a car loan during the marriage, that can be considered marital debt, as the family benefited from having the car. But if one spouse accrued gambling debts from casino visits that he or she kept secret from a spouse, those may not be marital debts.
Ultimately, who is responsible for marital debt? You and your spouse. What is considered marital debt and how it is distributed is where the process gets more complicated than a one-line answer. Be sure to consider and be familiar with all the debts you and your spouse have incurred during your marriage.
To help you understand marital debts, assets and their role in divorce, contact our office to discuss your situation and see whether we can be of service to you.