The Presumption Of Marital Debt In Virginia Divorce

Posted on November 7th, 2012, by James Livesay in Divorce, Family Law. Comments Off

Marital Debt in Virginia DivorceIf your spouse was a reckless spender during your marriage, and you thought divorce would finally end the financial pillage of your hard-earned dollars and the unspeakable terrorizing of your credit score—think again. Effective July 2011, all debt incurred by either party after the date of marriage and before the date of separation is presumed to be marital. But, you protest, she signed up for that Macy’s card alone and I haven’t seen one thing in the house from Macy’s! According to the amended Virginia Code Section 20-107.3(A), if you believe a debt incurred during the marriage is separate, you have to prove it, regardless of whose name was on the account.

It was not always this way. In April 2010, in the case of Gilliam v. McGrady, the Virginia Supreme Court stated that debts jointly incurred during the marriage are presumed marital unless proven otherwise, and debts individually incurred during the marriage are presumed separate unless proven otherwise. Therefore, if you were divorcing your spendthrift husband in the summer of 2010, his Best Buy balance, incurred during the marriage, would remain in his name alone unless he could prove his subwoofers, iPad and laptop benefited the marriage or family. In Gilliam v. McGrady, the husband had racked up hundreds of thousands of dollars in tax debt for his own business during the marriage. The wife challenged that this individually incurred debt should not be presumed marital as she had no knowledge of her husband’s business dealings, and the Supreme Court agreed. This seems only fair—if you incur the debt for your own personal use or due to your own financial mismanagement, you should bear the responsibility of proving that it was a marital expense.

So, why the change back to the status quo? Why should the thrifty, innocent spouse get saddled with the individual debts of the other just because of bad timing? The Virginia Supreme Court’s decision in 2010 was technically a more exact interpretation of the definition in Virginia Code Section 20-107.3 of marital and separate debts; however, it created a practical dilemma. Most couples do not keep every statement and receipt for a 5, 10 or 20 year marriage. Furthermore, credit card statements do not show exactly what was purchased, so it was virtually impossible for a person to overcome the presumption that a debt incurred during the marriage, but held in his or her individual name, was in fact marital.

Putting the shoe on the other foot, you, like many other married people, probably did not think about the family law ramifications of putting the Home Depot card in your individual name when you and your spouse began home improvements. Likewise, the MasterCard account you opened for Christmas gifts or the Discover card that paid for car repairs, oil changes and gas when money was tight, was certainly not intended to be a separate debt when you put it in your individual name. And the receipts for all those pesky incidentals? Definitely long gone in the landfill. The July 2011 amendment saves you from having to prove these expenses are marital and should be shared as such.

You still have the problem of proving your high-roller spouse acquired substantial separate debt during the marriage for which you should not be responsible. Virginia courts presume you and the family benefited from all such debts—but a good attorney can help you prove otherwise, so that you are not saddled with any liability for those debts post-divorce.

The divorce attorneys at Livesay & Myers, P.C. have extensive experience with these and other issues that frequently arise in the equitable distribution of property and debts in Virginia divorce cases. We represent clients in Manassas, Fredericksburg, Fairfax, and throughout Northern Virginia. Contact us to schedule a consultation today.

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Attorney James Livesay is a Partner at Livesay & Myers. After graduating from the University of Virginia School of Law in 1998, he began his legal career in the Navy JAG Corps, before entering private practice as a Virginia family lawyer in 2001. Along with partner Kevin Myers, Mr. Livesay founded Livesay & Myers in 2003. Today he advises the attorneys in each of the firm’s three offices.

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