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Dividing Marital Debt in Divorce

on in Family Law

marital debt, debt, Illinois divorce lawyerWhile the concept of debt is not always a terrible thing, it can certainly be extremely stressful in certain situations. For example, when you and your spouse took out an auto loan to buy a new car, you probably viewed it more as an investment in your family and less as the incursion of new debt. That same car loan, however, viewed from perspective of divorce, may now seem significantly more complicated. Other consumer debt may be similar, as couples frequently rely on credit cards and home mortgages throughout the course of their marriage. Like marital property, marital debt must be allocated equitably between the spouses in divorce, and there are some important things to keep in mind.

Marital Debts vs. Non-Marital Debts

Before debt can be divided, the couple and the court must first clearly determine which debts are marital and which are not. In most cases, debt incurred during the marriage, including home and auto loans, personal debts, credit cards, and other obligations are marital debt. Those which either spouse brought with them to the marriage are generally non-marital. As with many aspects of divorce, there are some uncertainties that will depend upon the circumstances of the situation. For example, a student loan incurred by one spouse during the marriage may or may not be found to be a marital debt, based upon how the loan benefitted the couple, the marriage, and each spouse.

Consider Paying it Off

Once you and your soon-to-be ex-spouse have an understanding of what property debts will need to be allocated, you may wish to consider liquidating assets to pay off some of the debt. Doing so may not always be possible or even advised, but a financial planner or your attorney can help you analyze your options. For example, you and your spouse may own $500,000 of property to be divided, with $100,000 in marital debt, including mortgages and auto loans. If paying off the $100,000 is reasonable, then you would be able to divide $400,000 worth of assets without messy entanglements of allocated debt.

Divorced but Still Responsible

Be sure to follow up on all instruments of debt following the issuance of your divorce settlement and the allocation of marital debt. The divorce decree itself is rarely sufficient to remove yourself from liability regarding jointly held debt, such as credit cards, even if your spouse has been made responsible for them. You can contact the debtholders and attempt to remove your name and liability, but, if you are unable to do so and the other party fails to make payments, you may still be held responsible by the terms of your original contract. Your only recourse would be legal action against your ex for violating terms of the divorce agreement.

For more information regarding the division of debt during divorce, contact an experienced St. Charles divorce attorney at Bochte, Kuzniar & Navigato, P.C.. We understand the intricacies of the law and are equipped to help you find the solutions that work best for your situation. Schedule your free consultation by calling 630-377-7770 today.


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