1953 Ridge Road, Homewood, IL 60432

Call Us312-702-1293

The Foray Firm
Subscribe to this list via RSS Blog posts tagged in division of debt

Will County divorce lawyerStudent loan debt is a serious burden for millions of Americans, with recent statistics showing an average debt of more than $30,000 among borrowers. Often, borrowers take 20 years or longer to fully pay off their loans. With this in mind, there is a good chance that if you are going through a divorce, you, your spouse, or both of you will have outstanding student loan debt. You should be sure to understand how this debt will affect the division of marital property, as well as your financial situation after the divorce.

Marital and Non-Marital Debt

One of the most important steps when getting a divorce is to take inventory of all of your assets and debts, as well as all those belonging to your spouse. Each spouse’s non-marital assets and debts will stay with them after the divorce, while marital assets and debts will be distributed fairly between the spouses. The question, then, is whether student loans qualify as non-marital or marital debt.

It is common now for people to wait until after graduating college to get married, meaning that many spouses have taken out student loans before their marriage begins. Student loans incurred before the marriage are an example of non-marital debt. However, if you or your spouse took out student loans during your marriage to further your education, they will most likely be considered marital debt. The fact that the loans financed only one spouse’s education, or that only one spouse signed on the loans, will not change their marital status. If you get divorced later in life after taking out loans in your name to finance your children’s education, these loans will also likely be considered marital debt.

...

Am I Responsible for My Spouse’s Credit Card Debt in Divorce?When going through a divorce, there are often two areas that bring about the most contention: children and finances. These two subjects can sometimes bring out a side of your spouse that you have never seen before. Financially speaking, a divorce forces you to look into the nitty-gritty details of both you and your spouse’s spending habits. Couples may think they know their partner until hidden debts get revealed. Whether or not you were the hand behind the spending, you may be responsible for paying these dues during the marital asset division process.

Equitable Distribution

Like most states throughout the U.S., Illinois follows the equitable distribution model when dividing marital property in a divorce. This means that all assets and debts are divided equitably, not necessarily in half. In other words, the judge considers various factors before dividing anything up between spouses. This includes each spouse’s income, financial needs, and personal assets. The asset division process not only includes positive property owned by the couple, but also any debt incurred throughout their marriage. This must also be divvied up between the two individuals, especially any credit card debt that has accumulated over the years.

What About Credit Card Debt?

Unfortunately, some spouses may uncover large amounts of credit card debt that they were unaware of and not responsible for during the divorce process. Though your spouse may have been the one spending the money, if your name is tied to the account in any way, you are still on the hook for the amount owed. A divorce agreement cannot alter your contractual obligation to the creditor who lent your spouse the money that they spent using the card.

...

Dealing With Marital Debt During an Illinois DivorceThe majority of your negotiations during your divorce will involve you and your spouse fighting over what each of you wants out of the divorce. One of the only things you and your spouse will not be fighting to keep are the debts that the two of you incurred during your marriage. In an ideal world, you and your spouse would each walk away from the marriage with only the debts that you each created, but that is not how divorce works. Illinois divides marital assets and debts on an equitable basis, which typically means you will only be responsible for the debts that you have the means to repay. If you and your spouse have a difference in income, the spouse with the higher income will typically be responsible for more of the marital debt.

Go Into Your Divorce Debt Free

Most divorce attorneys will tell you that your troubles can be cut in half if you go into your divorce without any marital debt. Lenders typically do not care about divorce decrees, nor are they legally required to abide by them. Lenders just want their money. If your spouse is ordered to repay a certain debt that also has your name on it, you are still legally responsible for that debt after divorce and can suffer the consequences if that debt is not paid back. Still, it is unfeasible for many couples to repay all of their debts before getting a divorce, though you should repay as much as you can.

Allocating Secured and Unsecured Debts

Handling debts during a divorce can be done in a few different ways, depending on the type of debt it is. Secured debts, or debts that are secured by a certain asset, such as a house or car, typically require refinancing if one spouse is keeping the asset and both spouses are on the debt agreement. To release one spouse from being legally obligated to repay a secured debt, the spouse who is keeping the asset must qualify for refinancing on his or her own.

...
BBA Of Will County Illinois State Bar Association Cook County Bar Association The National Bar Association BWLA
Back to Top