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Dividing Debt in a Louisiana Divorce 

Law Office of Ivy L. Graham June 12, 2024

Husband and wife sitting in bed angry at eachotherDivorce is filled with difficult tasks that call for outside assistance, particularly when it comes to dividing debt. In Louisiana, the division of debt follows specific legal guidelines that can significantly impact both parties' financial futures. Understanding these guidelines and how they are applied can help you tackle this challenging aspect of divorce more effectively. 

If you have questions or need assistance with dividing debt during your divorce, don’t hesitate to reach out. Contact The Law Office of Ivy L. Graham today to schedule a consultation and take the first step toward financial stability in your post-divorce life. We proudly serve clients throughout Denham Springs, Walker, Watson, Livingston, Holden, Springfield, and Albany, Louisiana. 

Louisiana Is a Community Property State

Louisiana is a community property state, meaning that most debts incurred during the marriage are considered jointly owned by both spouses. This principle applies regardless of whose name is on the debt or who primarily benefited from the borrowed funds. Essentially, both parties are equally responsible for debts acquired from the date of marriage until the official date of separation. 

In practice, this means that if one spouse takes out a loan or incurs a credit card debt, the other spouse is equally liable for repayment, even if they were unaware of the transaction. This rule is in place to ensure fairness and shared financial responsibility in a marriage.  

However, it can also lead to complications in the event of a separation or divorce, as determining the division of debts can become a contentious issue. Understanding this principle is important for couples to manage their financial obligations effectively and avoid potential disputes. 

Types of Debt Considered

Mortgage debt: 

  • If both spouses are co-owners, the mortgage debt is typically divided equally. 

  • When the home is awarded to one spouse, they may also assume the mortgage debt, possibly offset by other assets. 

Credit card debt: 

  • Any balance owed on joint credit cards is generally divided equally between spouses.  

  • For cards held in one spouse’s name but used for marital expenses, responsibility for the debt may still be shared. 

Auto loans: 

  • Loans for vehicles used by both spouses are usually split, whereas loans for a vehicle used by one spouse may be the responsibility of that individual, particularly if they retain the vehicle post-divorce. 

Student loans: 

  • Student loans taken out before the marriage remain the responsibility of the individual. Loans incurred during the marriage for one spouse's education can be trickier and are often subject to negotiation. 

Factors Influencing Debt Division

While the baseline approach is to split debts equally, Louisiana courts can consider various factors to ensure a fair outcome, including: 

  • Each party’s income and earning potential 

  • The purpose of the debt and how it benefited the marriage 

  • Financial contributions of each party during the marriage 

  • Any prenuptial or postnuptial agreements in place 

Negotiating Debt Division

Couples often have the chance to negotiate the division of debt outside the courtroom, through mediation or collaborative divorce processes. These methods can offer more flexibility and control over the final agreement compared to a court-imposed decision.  

Mediation involves a neutral third party who helps the couple reach a mutually agreeable solution, while collaborative divorce allows both parties to work together with their respective attorneys to negotiate terms.  

Engaging a skilled family law attorney is crucial to ensure your interests are protected and to facilitate fair negotiations. An experienced attorney can provide valuable guidance, help you understand the law, and work toward achieving an equitable distribution of debt that considers both parties' financial situations. 

Protecting Your Financial Future

It’s essential to consider the long-term impact of debt division during your divorce proceedings. Financial decisions made now can have lasting consequences, so it’s crucial to tackle this aspect with diligence and care.  

To safeguard your financial future, start by obtaining a clear understanding of all debts, including credit card balances, personal loans, and mortgages, by requesting copies of both spouses' credit reports. This comprehensive view will help identify any hidden liabilities. 

Next, develop a robust plan for managing and paying off divided debts post-divorce. This might involve negotiating with creditors, consolidating debts, or setting up a payment schedule that both parties can adhere to.  

Seek guidance from an experienced family law attorney for help with Louisiana’s community property laws, which can affect how debts and assets are divided. A knowledgeable attorney can provide insights into your specific situation and help ensure a fair distribution. 

By taking these steps, you can work toward a stable and secure financial future despite the challenges of divorce. 

Seek Professional Legal Guidance

At The Law Office of Ivy L. Graham, we recognize the financial uncertainties that divorce can bring, especially when it comes to dividing debt. Our team, based in Denham Springs, Louisiana, and serving clients in Livingston, Colyell, Holden, and Albany, is dedicated to providing you with knowledgeable and compassionate legal support. By leveraging our expertise in family law, we aim to ensure that your rights are protected and that you achieve a fair and equitable resolution.