Virginia Equitable Distribution: Loose Lips and the Meaning of Marital Debt

The Richmond Circuit Court was recently faced with dividing up a marital home per a divorce in Massicot v. Massicot, CL12-539.  The court was tasked with determining whether the marital home was marital property or separate property and whether the mortgage debt was marital debt or separate debt.  The court held as follows:

 “The Home, on the other hand, is titled in both parties’ names and was obtained during the marriage. Husband testified that he wants to maintain the mortgage, obtained during the marriage, as his separate debt. Wife did not contest this issue. The mortgage is solely in his name. Husband testified, without objection, that the Home is severely underwater. The court finds that the mortgage is his separate debt although the Home, titled in both parties’ names and obtained during the marriage, marital property . . . Considering the factors under the statute, the Court finds that the Home shall be titled solely in Husband’s name in exchange for Wife having no responsibility for the mortgage as a marital debt.”

This outcome is not at all surprising given that the husband agreed to assume all ownership of and liability for an underwater home.  What is unusual is the court’s loose language in addressing the mortgage debt.  Indeed, the court makes a finding of fact that the mortgage is the husband’s separate debt, and then removes any of the wife’s responsibility for it as a marital debt.  So which one is it: marital or separate?

Virginia Code §§ 20-107.3(A)(4) and (5) state:

 “4. Separate debt is (i) all debt incurred by either party before the marriage, (ii) all debt incurred by either party after the date of the last separation of the parties, if at such time or thereafter at least one of the parties intends that the separation be permanent, and (iii) that part of any debt classified as separate pursuant to subdivision A 5. However, to the extent that a party can show by a preponderance of the evidence that the debt was incurred for the benefit of the marriage or family, the court may designate the debt as marital.

5. Marital debt is (i) all debt incurred in the joint names of the parties before the date of the last separation of the parties, if at such time or thereafter at least one of the parties intends that the separation be permanent, whether incurred before or after the date of the marriage, and (ii) all debt incurred in either party’s name after the date of the marriage and before the date of the last separation of the parties, if at such time or thereafter at least one of the parties intends that the separation be permanent. However, to the extent that a party can show by a preponderance of the evidence that the debt, or a portion thereof, was incurred, or the proceeds secured by incurring the debt were used, in whole or in part, for a nonmarital purpose, the court may designate the entire debt as separate or a portion of the debt as marital and a portion of the debt as separate.”

The mortgage debt is clearly marital debt.  It is a debt incurred in one party’s name after the date of marriage and before the date of the last separation of the parties.  The court therefore should have held that it found the mortgage to be marital debt and that it was apportioning all of that debt to the husband per his request so that it would become his sole separate debt upon entry of the Final Order of Divorce.

Print Friendly, PDF & Email