Maryland Divorce Lawyer Blog
One of the most important aspects of any divorce is the division of marital assets and debts. A crucial part of that process is separating marital from non-marital. Sometimes, it is as easy as looking at how an asset or debt account is titled, but in Maryland, that is far from the only relevant factor. Given the importance of fair distribution of debts and wealth, having a knowledgeable Maryland divorce lawyer on your side can be critical to success.
According to the Federal Reserve in New York City, Americans’ collective credit card debt has cleared the $1.2 trillion mark, shattering all previous records in that area. Credit card debt can be a substantial part of married couples’ lives, making it a significant piece of the divorce puzzle when those marriages end.
Such was the case for one Upper Marlboro couple who recently came before the Appellate Court of Maryland.
The wife, A.G., filed for divorce in 2023 after 22 years of marriage. By then, the wife’s credit cards had a collective balance of almost $108,000. The wife held all the family’s credit cards solely in her name, allegedly because she had a superior credit score to the husband.
The trial judge credited the wife’s position on the credit cards and decided the debt was marital, splitting it 50-50. That ruling did not survive an appeal. While Maryland law gives trial court judges wide latitude in dividing assets and debts as part of a divorce, making the husband pay for 1/2 of these credit card balances was inconsistent with what the law allows.
This ruling favoring the husband came down to the specifics of certain legal definitions. Divorces in Maryland can only divide marital property and marital debts. A debt must be “directly traceable to the acquisition of marital property” to qualify as marital. Translation: the amounts owed on the wife’s credit cards could only be marital debts if the family used them to acquire marital property.
What is ‘Marital Property’?
Maryland has a statute that answers that question, Family Law Article Section 8-201. That statute says marital property is “property, however titled, acquired by 1 or both parties during the marriage.” Applying that, the appeals court concluded that the credit card purchases undisputedly “were made by one or both parties during the marriage. Thus, the only question was whether the credit card was used to purchase ‘property.’”
OK, So, What is ‘Property’ Under Maryland Law?
This might seem like a self-evident question, but in the law, things are often less self-evident than they appear on their faces. Looking to Maryland Supreme Court rulings from the 1960s and the 1990s, the appeals court declared that property “embraces everything which has exchangeable value” and includes “the lawful, unrestricted right of use, enjoyment, and disposal of the object.”
Under these conditions, the purchases on the wife’s credit cards did not qualify as “property.” The purchases were for renovations to the marital home’s roof, siding, kitchen, and one bathroom, as well as “gasoline, … dining out, and [the] eldest daughter’s college expenses.”
College education, gasoline, and restaurant food do not have an “exchangeable value.” Similarly, building materials already utilized in a home renovation project do not have an exchangeable value because, once used, they are part of the house and are no longer individual saleable items. Because none of the items could be sold on the secondary market for an “exchangeable” amount, they were not property, meaning the credit card balances were not marital debt, and the trial court was not within its authority to demand that the husband pay half the amount owed.
As this case illustrates, things often are not what they seem when differentiating marital vs. non-marital assets and debts. That’s why arriving at a proper outcome requires in-depth knowledge of Maryland’s laws in this area. When it comes time to complete a divorce and divide your assets and debts, look to the experienced Maryland family law attorneys at Anthony A. Fatemi, LLC, for the reliable and knowledgeable advice and advocacy you need. Contact us today at 301-519-2801 or via our online form to set up your consultation.