Opinion ID: 1742971
Heading Depth: 1
Heading Rank: 3

Heading: assignment of debt.

Text: Appellant asserts that all debts incurred during the marriage are presumed to be marital debts and should be assigned in the same proportions as the marital assets. Here, the family court judge made an approximately equal distribution of assets and debts, except that he assigned the $26,000.00 debt owed to Appellant's mother and two friends entirely to Appellant. There is no statutory authority for assigning debts in an action for dissolution of marriage. Nevertheless, such assignments are routinely made as a matter of common law in all divorce actions, e.g.: As to the requirement that Obie pay a $1,000 debt to Sears, we find no problem. The trial court determined that the debt was a marital debt, and in making the division of marital properties and assignment of all assets and debts, the court ordered this debt be paid by Obie. We find nothing reversible on this point in fact or law. Spratling v. Spratling, Ky.App., 720 S.W.2d 936, 938 (1986). Nor is there a statutory presumption as to whether debts incurred during the marriage are marital or nonmarital in nature. In Bodie v. Bodie, Ky.App., 590 S.W.2d 895 (1979), a panel of our Court of Appeals held that in the absence of a statutory provision, no presumption with respect to marital debts should be judicially implied. Id. at 896. Shortly thereafter, another Court of Appeals panel held that debts incurred after the separation of the parties and the cessation of joint activities, but before entry of the final decree, should be assigned to the party who incurred them, implying that all such debts are nonmarital. O'Neill v. O'Neill, Ky.App., 600 S.W.2d 493, 496 (1980). Other panels held that such debts could be deemed marital in nature if incurred for the benefit of the family, e.g., to provide necessary support for the children, Gipson v. Gipson, Ky.App., 702 S.W.2d 54, 55 (1985); or if incurred to acquire property designated as marital property. Daniels v. Daniels, Ky.App., 726 S.W.2d 705, 706-07 (1986). [5] However, the opinion in Daniels, supra , went on to say that all debts incurred after the marriage and before the decree are presumed to be marital debts unless the presumption is rebutted. Id. at 706. Citing Daniels , yet another panel held in Underwood v. Underwood, supra , that [d]ebts accrued subsequent to separation, but before entry of a divorce decree are rebuttably presumed to be marital debts. Id. at 445. The only other Court of Appeals decision relevant to this inquiry is Van Bussum v. Van Bussum, Ky.App., 728 S.W.2d 538, 539 (1987), which held that a debt incurred after separation for the sole benefit of the party by whom it was incurred should be assigned to that party alone. We conclude that the Court of Appeals got it right in Bodie v. Bodie, supra . Where there is no statutory presumption, one should not be judicially inferred. Herron v. Herron, Ky., 573 S.W.2d 342, 344 (1978) (in the absence of a statutory mandate, there is no presumption in favor of an equal division of marital property). In Bodie , a $14,610.00 debt was incurred by the husband without the wife's knowledge. The husband, who was the only party who knew the purpose for the debt, declined to share that information with the court. Id. at 896. Application of a presumption that all debts incurred during the marriage are marital debts would have required the wife to prove that the debt was nonmaritalan impossible burden, since only the husband knew the truth. Bodie applied principles of equity, not artificial presumptions, in affirming the assignment of the debt to the husband. Debts incurred during the marriage are traditionally assigned on the basis of such factors as receipt of benefits and extent of participation, Van Bussum v. Van Bussum, supra , O'Neill v. O'Neill, supra , Bodie v. Bodie, supra , Inman v. Inman, Ky.App., 578 S.W.2d 266, 270 (1979); whether the debt was incurred to purchase assets designated as marital property, Daniels v. Daniels, supra ; and whether the debt was necessary to provide for the maintenance and support of the family, Gipson v. Gipson, supra . Another factor, of course, is the economic circumstances of the parties bearing on their respective abilities to assume the indebtedness. To the extent that Daniels v. Daniels, supra , and Underwood v. Underwood, supra , hold that there is a presumption with respect to debts incurred during a marriage, they are overruled. Nor is there any presumption that debts must be divided equally or in the same proportions as the marital property. Cf. Herron v. Herron, supra ; McGowan v. McGowan, Ky.App., 663 S.W.2d 219 (1983). As with issues pertaining to the assignment of marital property, issues pertaining to the assignment of debts incurred during the marriage are reviewed under an abuse of discretion standard. Here, the trial court concluded that the $26,000.00 debt was incurred primarily for Appellant's own benefit and secondarily to maintain the parties' child in an expensive private school to which Appellee objected. Appellee was paying maintenance and child support when these debts were incurred. According to Appellant, she borrowed this money to provide additional maintenance and child support. If these debts were assigned to Appellee, the effect would be to allow Appellant to unilaterally increase Appellee's maintenance and support obligation to a level substantially higher than that established by court order. We conclude that the assignment of these debts to Appellant was not an abuse of discretion. Accordingly, for the reasons stated, the decision of the Court of Appeals is affirmed and this case is remanded to the Jefferson Circuit Court to reconsider the spousal maintenance award in accordance with the mandate of the Court of Appeals. GRAVES, JOHNSTONE and WINTERSHEIMER, JJ., concur. KELLER, J., concurs by separate opinion in which LAMBERT, C.J., and STUMBO, J., join.