What Couples Need to Know About Marital Debt in a Divorce

 Posted on August 09, 2024 in Divorce

Divorce is a process that can feel scary and overwhelming, with emotions running high and decisions to make at every turn. One aspect that can be particularly difficult to figure out involves marital debt. Couples in Illinois who decide to dissolve their marriage need to understand how marital debt is treated, as the issue can have long-lasting implications for both parties. In order to understand these implications, hiring a qualified attorney is an essential first step toward protecting your interests and your future.

What is Marital Debt?

In the context of divorce, marital debt refers to any financial obligations acquired during the marriage. Marital debt may include credit card balances, personal loans, mortgages, and any other debts that were taken out by either spouse to benefit the family. Illinois operates under the principle of equitable distribution, meaning debts (just like assets) will be divided fairly.

What Impact Does Debt Have on Asset Division?

When you are divorcing, marital debt can significantly impact how marital assets will be divided. For example, if one spouse has a sizable debt balance, it may be considered when determining how best to divide other assets like the family home or retirement accounts. A spouse who is taking on more debt might receive more marital assets in order to "balance the scale."

Individual vs. Joint Debt

In many cases, debt causes more friction than marital assets simply because of the fact that, regardless of who spent the money, debt taken out by either spouse during a marriage is usually considered marital debt. A husband with a credit card spending problem may also burden his wife with that debt when they divorce. However, debt that either spouse took on before getting married, including student loans, is not considered marital debt and will typically belong to whichever spouse owed it before the marriage.

To put it simply, any debt accumulated in one spouse’s name alone is usually considered individual debt. Understanding this important distinction is important; only marital debts are subject to division during divorce proceedings.  

What Role Does Debt Play in Spousal Support Considerations?

Aside from asset division, marital debt can also influence spousal support, otherwise known as alimony. If one spouse has taken on a significant amount of debt during the marriage, this may impact his or her financial need and, as a result, the amount and duration of spousal support he or she may receive.

Strategies for Managing Debt in Divorce

As you approach a divorce, it is wise to develop a strategy for managing marital debts. Here are a few approaches you may consider:

• Create a list of all debts – Gather all financial documents to identify your marital debts accurately.

• Negotiate – Talk with your spouse about how to fairly divide debts before it escalates to the point where a judge has to make decisions for you.

• Consult a professional – Aside from your divorce attorney, engaging a financial advisor or a mediator can help you navigate complicated financial issues. If the potential debt burden is overwhelming, it may be worth speaking to a bankruptcy attorney before filing for divorce to see what your options are.

Contact Our Plainfield, IL Divorce Asset Division Attorneys

Divorcing in Illinois involves several considerations regarding marital debt. For assistance during this process and with the rest of your divorce, our experienced Will County, IL divorce lawyers at the Law Offices of Tedone and Morton, P.C. can help. Call 815-666-1285 for a complimentary consultation today.