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Debt Allocation in a Kentucky Divorce

In a Kentucky divorce, statute and established precedent require the equitable division of marital debt. Many litigants fail to understand what this means and conflate the term equitable with the term equal. In cases with significant debt, a judge may consider a multitude of factors in making the division. Relative incomes, the underlying need which gave rise to the debt, the disposition of property which was acquired with the debt (or which may serve as collateral for the debt) and the ability of the parties to service the debt all become relevant factors; the final result will not necessarily look equal, but that division will be deemed equitable.

As a Kentucky divorce practitioner, I make every effort to help a client understand what debt division proposals mean during the mediation process - the results can be far reaching, and can affect everything from the acquisition of a home or car to affecting insurance rates and the ability to find employment, depending on how the credit report reads.

Another factor which is extremely relevant is debt division is the Federal bankruptcy law. Many litigants believe that they can bankrupt obligations received pursuant to a divorce decree, however, these are deemed domestic support obligations, and exempt from discharge under Federal bankruptcy law. Ultimately it means that any obligation undertaken in a divorce decree belongs to that litigant until it is paid off or released, and there have been many contempt actions filed agains family court litigants who were under the impression that their debt was extinguished.