How Debt Can Be Divided in a Divorce in Illinois

 Posted on June 15, 2022 in Divorce

During the divorce process, couples may struggle with how to divide many of their marital assets, including the marital home, investments, and retirement accounts. An equitable distribution will involve give and take and both sides will value certain assets over others. However, many will overlook the marital debts that they have incurred and the importance of distributing them fairly. Both parties must work together to account for all debt before or during the divorce process.

Common Types of Marital Debt

In Illinois, debt incurred by either spouse during a marriage is considered marital debt, unless specified in a prenuptial or postnuptial agreement. This includes debt and loans in both spouses’ names and taken on by just one spouse. Debt that was incurred before the marriage is not typically considered marital debt. Common forms of martial debt are:

• Home mortgages – This can include mortgages for homes purchased together or a mortgage that was refinanced during the marriage.

• Vehicle loans – This includes cars purchased jointly or by each spouse, regardless of who was the primary driver.

• Credit card debt – For both joint and individual credit cards, no matter who made the purchases.

• Student loans – For secondary or continuing education during the marriage.

• Business debt and loans – This includes debt for jointly owned family businesses or when a business is just owned by one spouse.

Debt Division Strategies Used by Divorcing Couples

No matter what types of debts need to be divided, it is likely both spouses will end up responsible for some of the marital debt. There are various ways for debt to be equitably divided, and the method may differ between the different types of debt.

• Paying off the debt using existing assets. If the debts owed are not substantial, the couple may agree to use existing savings to pay off the debt. Some couples will also agree to sell other assets and use the proceeds to pay off the debt.

• Negotiate that one spouse will take on a larger portion of the debts in exchange for retaining more marital assets.

• Split the debts equitably between you. After the divorce is finalized, couples should make sure that the other spouse’s name is no longer on the loan so that their credit is not negatively affected

Call an Arlington Heights Marital Debt Lawyer

No matter how large or small the debt that you owe before your divorce, it is helpful to have an experienced divorce attorney by your side during negotiations. At Law Offices of Donald J. Cosley, our Rolling Meadows divorce attorneys can help you determine your best course of action to divide marital assets and debts so that you can be financially secure. Call us today at 847-253-3100 to schedule your free consultation.

Source:

https://www.ilga.gov/legislation/ilcs/documents/075000050k503.htm