How Is Debt Divided During A Divorce In Illinois

 Posted on December 06, 2019 in Family Law

During a divorce, the separating parties, a mediator or a judge will decide how assets and properties are divided during a divorce. However, there is another financial aspect of a divorce that should not be overlooked when splitting – debt. Illinois considers debt marital property, but that doesn’t mean any debt is going to be divided 50-50. Below, we explain how debt is divided during a divorce, and we explain why having a family law attorney by your side during this process is essential.

Dividing Debt During A Divorce

Illinois is considered an equitable distribution state, which means that debt will be distributed fairly, not 50-50, between the couple. As you might have guessed, there are a number of factors that helps to determine what is fair when dividing debt. When the debt was incurred, whether the debt was for marital property and how much debt remaining all factor into this equation.

For example, if you and your spouse each bought a vehicle during your marriage and are now filing for divorce, you may assume that you’ll just keep your car and they’ll keep their vehicle. But if your spouse’s vehicle is paid off, and you still owe $15,000 on your truck’s loan, each taking a vehicle isn’t exactly a fair split. And while the judge won’t order your spouse to help out with payments on your truck, you may get more assets during property division since you’re also taking on more debt by keeping the truck.

There’s also the question as to when the debt was acquired, and the purpose of the debt. Again, this is best explained with examples. If your spouse is still paying off school loans that they took out before you got married, that will be considered your spouse’s debt. However, if during the marriage your spouse opted to go back to school, that would likely be considered marital property debt that would be considered during property division. In the second scenario, even though the loan may have been taken out in your spouse’s name, the argument could be made that they were going back to school to earn more money that would benefit the family as a whole, and thus it’s not an individual debt that is not to be shared.

Here’s nother example as it pertains to the purpose of the debt. If your husband is buying jewelry for his mistress or flying across the country to take his girlfriend on a vacation, your lawyer can argue that this constitutes the dissipation of the marital estate, and those expenses should be considered personal debt not marriage property. That’s not to say that every purchase needs to equally benefit the family in order to be constituted marital property. An ATV the husband bought three years ago that the wife never rode wouldn’t constitute the dissipation of the marital estate, it would be considered marital property that would be divided fairly.

Finally, it’s very important to realize that a “fair division” doesn’t mean that marital debt and assets will be divided such that each person will receive the same value of marital property and the same value of marital debt. It’s possible that both parties will leave with $100,000 in assets and $15,000 in marital debt, but it’s unlikely to work out that way. When dividing assets fairly, the court also considers spousal needs, the length of the marriage and both spouses’ ability to maintain their lifestyles after a divorce. For example, a wife who has been a stay at home mother for the last decade may receive more assets and fewer debts during a divorce compared to her husband who is earning $125,000 a year at his job as an engineer because it’s likely that the wife be reentering the workforce at a much lower pay rate given her absence from the job market for so long, and thus it would be unfair to give each party the same amount of assets and debt given how the next few years would be expected to play out. The husband and wife’s future earnings potential will be considered to make for a fair and equitable division of marital property.

So as you can see, there’s no simple formula for property and debt division during a divorce, and even if you’re having an uncontested divorce, you shouldn’t go through the process without an attorney in your corner to make sure you’re getting a fair shake. Again, your spouse taking their car and you taking yours may seem fair, but when debt is considered, it may be far from a fair division, so let the lawyers at Appelman Law help you get the equitable division you deserve. For more information, or for help with your contested or uncontested divorce, reach out to our office today.