Paying off debt is usually regarded as a good thing, but it can actually cause problems for some business owners. This is because business debt and income might not be treated as they expect. Understanding how Kentucky courts might interpret a business’ debt and its owner’s income can give one confidence when dealing with things like support payments and property division.

Owners sometimes choose to take only a portion of their business’ income in order to pay off business debts more quickly. For example, an owner may choose to take only 70% of his or her business’ income, and use the remaining 30% to pay off loans. But since he or she has access to an income much greater than the 70%, the court might use the full 100% of business income when setting support payments.

Problems can also arise when an owner chooses to utilize business debts for marital purposes. Taking out a loan against business property to pay off marital expenses might seem like a good idea, but an ex-spouse might argue that the loan should not be considered marital debt. If the court agrees that the loan was purely business, the owner will be stuck with the full cost of paying it back.

Most people do not make business decisions based on the possibility of filing for divorce one day. This can be a problem for Kentucky business owners who do end up filing for divorce. But just because something might be difficult does not mean that it is impossible. Taking a proactive approach to support payments and property division can be very helpful for those who are in this situation.