Tag Archives: debt division

Who Is Responsible for Marital Debt in an Illinois Divorce?

shutterstock_562619533Many couples fight about finances throughout the course of their marriage. Money issues and especially debt can wreak havoc on a marriage, and in many cases, financial concerns can be a significant factor in the decision to get a divorce. Sometimes, one spouse will rack up huge amounts of credit card debt without the other spouse even knowing. Divorcing couples may wonder what will happen if one or both spouses have incurred a large amount of debt. Illinois divorce laws allow for equitable distribution of marital property, and this includes the division of debts. However, exactly how marital debt is to be divided depends on each situation, since every divorce is unique.

Marital Assets and Debts

Marital debt refers to any debts that a couple accumulates while they are married. These debts may include a mortgage, credit cards, vehicle loans, and student loans. During divorce, marital debts will be divided between the spouses according to Illinois’ equitable distribution laws. Credit cards, even if they are only in one spouse’s name, are still considered marital debt that the court will divide.

The court will review several factors to determine which spouse should be responsible for certain debts. For example, one spouse may have been the primary “breadwinner” of the family, and if they earn a higher salary, they may be better able to pay debts. On the other hand, if one spouse has been a stay-at-home parent for many years, they may have a lower income-earning potential after the divorce, and large amounts of debt could be financially crippling for them.
In general, marital debt is subject to equitable division, just like assets. In order to be as “equitable” as possible, one spouse may take on more of the marital debt, but in return, they may receive more marital assets to make up the difference. However, even if a portion of the debt is assigned to one spouse, they may choose not to make payments on it. Creditors are not legally obligated to follow a judge’s orders in a divorce case, and they may begin the collections process against either spouse. This means one spouse can be held responsible for any jointly held debt, such as a loan or credit card that they co-signed with the other spouse. Interest and penalties may apply to this debt as well. In order to avoid the possibility of one spouse being held responsible for the other’s debts, spouses should ensure that one spouse is removed from any joint accounts.

Taking Responsibility

Ideally, with the help of their respective attorneys or through mediation, divorcing spouses can work out an agreement on how to divide their marital debt. Options may include continuing to share the debt or dividing the debts so each partner takes responsibility for their own debts. In these cases, the spouses will not need to come up with a large sum of money to pay off the debts immediately. However, this can also be somewhat risky, since a person’s credit score may be negatively affected if the other party decides not to or is unable to pay off his or her share of the debts. Ultimately, the best option is to simply pay off any outstanding debts prior to completing the divorce. This method may be challenging, but it provides benefits in the long run by allowing both parties to start their new lives debt-free.

Contact a Wheaton, IL Division of Marital Debt Attorney

Amassing a large amount of debt can weigh heavily on someone, especially during a divorce. In Illinois, marital debt is considered marital property and therefore subject to division. If you are concerned about what will happen to you and your spouse’s debt post-divorce, a knowledgeable DuPage County divorce lawyer at the Andrew Cores Family Law Group will advise you on the best way to reach a positive resolution. To schedule a free consultation, call 630-871-1002 today.

Sources:

http://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=075000050K503

How Is Student Loan Debt Handled During Divorce?

DuPage County debt division attorneyIn 2017, the average student loan debt for graduates was over $37,000, which would amount to more than $45,000 when paid over 10 years with an average interest rate. This is a considerable amount of money. Graduate degrees are even more costly; the average student with a graduate degree has over $84,000 in debt, while the average medical school student has an astounding sum of $246,000 of debt. Many spouses may wonder what happens to this debt during divorce. This is a good question, because these debts can have a profound impact on a person’s life after finalizing the divorce process.

When the Loans Were Taken Out Before Marriage

If a student loan was procured before a couple was married, it will not be classified as marital property. Only marital property is divided during divorce. Non-marital property, such as bank accounts, real estate property, and debt, which was acquired before marriage remains the property and responsibility of that individual spouse. This means that if your wife took out $100,000 in law school loans before you were married, that debt will not become your responsibility after divorce.

Student Debt Acquired During Marriage

Everything changes when student loans are acquired during a marriage. However, simply because the debt is considered marital property does not mean that both spouses will be responsible for the debt. Many factors are taken into account when determining how to divide student debt, such as the following questions:

  • Which spouse profited from the education?

  • Did the non-debtor contribute to paying for the education or provide assistance in other ways, such as taking care of children while the debtor went to school?

  • How were the loans used? For example, did they cover housing as well as class fees?

  • What is the earning capacity of each spouse?

The spouse who went to school may end up being responsible for paying for all of their student loan debt after divorce based on how the above questions are answered. Depending on the circumstances and the decisions made during the divorce process, the other spouse may end up being responsible for paying off the debt as well.

A Wheaton Debt Division Attorney Can Help With Your Divorce

Distributing student loan debt during divorce can be exceedingly complicated. To ensure that your best interests are put at the forefront, you need an experienced DuPage County divorce attorney on your side. Call the Andrew Cores Family Law Group today at 630-871-1002 to schedule a free consultation.

Sources:

https://www.debt.org/students/

https://www.credible.com/blog/statistics/average-grad-school-debt-statistics/

https://www.cnbc.com/2019/05/20/how-much-the-average-student-loan-borrower-owes-when-they-graduate.html