Our Division of Debt Attorneys in Naperville represent an important area of divorce and family law. Like asset and property division, dividing debt during a divorce is equally important. Debts from any lines of credit, loans, or declining real estate you and your spouse accrued over your marital period become your joint responsibility. However, there is a chance you may have to settle the debts that were incurred during your marriage but are not in your name, depending on your health, assets, income, and personal situation.
At Keller Legal Services, our debt division attorneys can help you with unfair debt division and fight for your rights aggressively. We work closely with our clients in matters related to debt division in divorce and ensure that you are not saddled with debt that wasn’t yours in the first place. We come up with innovative solutions for negotiating a settlement that not only ensures your financial best interest but is also fair and protects your future.
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Our clients should understand how debt is divided in Illinois divorces. The process is as follows. During divorce proceedings, debts must be categorized as either separate or marital. Debts incurred before marriage or after separation are classified as separate and are the responsibility of the spouse who amassed them. In contrast, those financial obligations that are incurred during the course of marriage fall under marital debt, and regardless of who accrued it, both spouses are equally responsible for paying off that debt.
Our Naperville debt division attorney from Keller Legal Services can help you understand which of your debts are separate and marital and whether you are liable to pay them. The following are some forms of debt commonly divided in divorce cases.
Marital debts are put into a pot, just like marital assets are. The divorcing couple then needs to divide them. Debt, like assets, can be divided 50/50 or you can come up with some other division that works for you. When couples can’t agree to a division of debt, then a judge will divide them equitably. Judges look at many factors, including which spouse incurred the debt when deciding how to divide it fairly.
One of the recommended steps to take when you decide to get a divorce is to close any joint accounts shared between you and your spouse. This will save you from incurring any unnecessary debt under that joint account, which can have a negative impact on your credit rating.
Some spouses try to “strike back” at their spouse by running up massive bills. You can prevent this from happening by closing joint credit card accounts. Also discuss with your attorney what you should do with joint bank accounts, like a savings or checking account. Your ex might raid this joint account to pay off his or her personal debts, thus depleting marital assets and leaving you poorer after receiving your divorce decree. You want to protect yourself from that happening.
The average American household carries roughly $8,000 in credit card debt. Dividing this debt presents some unique challenges.
Many people wrongly assume that credit card debt is marital only if they have a joint card. Not so. Technically, any debt incurred by a spouse while married is marital, and this includes charges on a person’s individual credit card. Many of our clients are shocked to learn that their spouse had a card they didn’t know about and racked up tens of thousands of dollars in charges. They could be on the hook for some of this debt.
It is also easy for one spouse to incur debt as the divorce proceeds through the process. Will you be responsible for these debts, too? In our experience, judges look more closely at who incurred credit card debt after the couple separated. A judge can easily look at a monthly credit card statement and determine which spouse made the charges. Remember, one factor that goes into dividing marital debts is who incurred the debt. We can argue to the judge that it is only fair that the spouse who made the credit card charge gets that debt in the divorce. There is a statute of limitations on credit card debt in case you didn’t know!
Student loans are also divided equitably if they were taken out during the marriage. if the debt predates the marriage, then it is usually the responsibility of the person who signed for the loan.
Student loan debt continues to mount. Our lawyers see more and more couples with six-figure student loan debts. Being responsible for them can dramatically impede a person’s ability to become self-sufficient after divorce.
A judge will divide student loans by looking at various factors:
In our experience, judges will tend to assign student loans to the person who took out the loan. After all, this person gained the benefit of the education they financed. A doctor or lawyer, for example, has high earning power thanks to their education and will continue to reap the benefits years and decades down the road. It is not fair to assign a lower-earning spouse their student loans since he or she will not benefit from the increased income post-divorce. However, there are exceptions, and this is not a hard-and-fast rule.
Few people think about their debt when it comes to a divorce, but in our experience, it can play a key role. For example, debt can become a tool for negotiation. Many couples negotiate which assets they will leave the marriage with. You can also use debt as a bargaining chip.
For example, your spouse might want spousal support after a divorce, but you would prefer not to pay it. Instead, you can agree to take on more of the marital debt. In the long run, this type of trade-off might make sense for you, since you will end up paying your ex less going forward. Depending on how worried he or she is about the debt, your offer might be attractive.
Debt can also impact who receives certain pieces of marital property. For example, many couples have secured debts that are backed by collateral, such as a car loan or mortgage. The person who receives the asset often receives the debt that comes along with it.
Large debt loads can also make it difficult to move on after marriage. Before you can rent an apartment, a landlord will want to run a credit check. If you have poor credit, then you might find it hard to set up a new household. Discuss any concerns you have when meeting with division of debt attorneys in divorce. The division of debt in Illinois divorce cases is complicated.
Couples must ensure they protect their rights even after the debt is divided. For one thing, if your name is on a debt, the bank will hold you responsible for it regardless of what the divorce decree states. For example, a judge might have assigned all debt on a joint credit card to your ex. However, if he refuses to make payment, the bank can come after you because your name legally remains on the debt.
Consequently, our clients must get their names off any debt they do not get in the divorce. This can be challenging. If you have a joint mortgage, the spouse taking over the mortgage should refinance in his or her name only. If your ex is taking credit card debt, they should use a balance transfer to put the debt on a new card in their name only.
Many problems arise post-divorce because a person did not get their name off the debt. They can face collection actions and shredded credit if their ex defaults.
The outcome of the division of debt in Illinois can have a profound effect on your life after divorce. Deciding which party should be held accountable for settling debts is rarely straightforward, and the court procedure for making these decisions often yields less than ideal conclusions. Whether you are going through a collaborative divorce, facing a high net-worth divorce, or pursuing legal separation, you need a reliable and experienced attorney to evaluate your case and effectively negotiate on your behalf in order to secure your future.
Don’t compromise on your credit standing by getting buried under debts that are not your responsibility. Consult with one of our debt division attorneys today.
We invite you to schedule a free initial consultation by calling 630-505-1515 or by contacting the firm here. We handle cases in Naperville, Aurora, Wheaton, and Bolingbrook, as well as throughout DuPage, Kane, and Will Counties.
