Understanding how divorce impacts your life can, in general, be difficult and complex. Many people worry about how divorce will impact their assets. Specifically, parties often wonder what will happen to their bank accounts, pensions, and stocks, or they wonder who will get to keep the car or the house. However, depending on the parties’ finances and spending behavior, a bigger question is often: what happens to the debt?
Marital Property and Debt
Illinois law requires that property in a divorce be divided equitably, and the first step towards doing that division is determining what property is marital property, which is subject to division, and what property is separate property, which is not subject to division upon divorce. Generally, property and assets are considered marital property if they were acquired during marriage. Property and assets that were acquired prior to the marriage, or that were inherited by one spouse, are generally considered separate property. Those lines can be blurry; increases in the value of separate property may be considered marital property under certain circumstances and separate property can be converted into marital property, or vice versa, by taking specific actions (depending on the asset or property).
Those same principles of marital property and separate property apply to debt, as well. Debt incurred during the marriage is subject to equitable distribution between the spouses; debt incurred separately and prior to the marriage is not. However, given that debt follows us and changes throughout our lifetime, that explanation is not as clear cut as it may seem.
Credit Cards
Credit cards pose a particularly complex debt to deal with during divorce. While a credit card may have been opened, and used, prior to marriage, it’s also possible that the card was used throughout the marriage and incurred debt that was marital. Debt incurred during the marriage may, then, be considered marital debt and subject to equitable distribution.
Mortgages
Mortgages are even more complicated than other debts, such as debt incurred on credit cards. The mortgage is subject to equitable distribution, but certain additional factors may be important, such as whether or not the spouse has the ability to afford the mortgage payments or, if there are children involved, which spouse has custody of the children.
Equitable Distribution
It’s important to remember that just because an asset, or debt, is considered marital property and is subject to equitable distribution does not mean that it will be distributed equally. The court takes into account several factors when determining how to divide property and debt. So, for example, the debt on a credit card in one spouse’s name may be considered marital property, and can be assigned to one party or to both in equal or unequal shares.
In dividing marital property, Illinois law requires that the judge consider a number of factors, including:
- Contribution of each party to the acquisition, preservation, and value of the property;
- Dissipation by each party of the property;
- Value of the property assigned to each spouse;
- Duration of the marriage;
- Relevant economic circumstances of each spouse;
- Obligations and rights arising from any prior marriages;
- Antenuptial agreements;
- Age, health, occupation, amount and sources of income, vocational skills, employability, liabilities, and needs of each spouse;
- Custodial provisions for any children;
- Whether the apportionment is in lieu or in addition to maintenance;
- Reasonable opportunity of each spouse for future acquisition of assets and income; and
- Tax consequences of property division upon the respective economic circumstances of the parties.
Reach Out to a Family Attorney in Deerfield
If you are seeking skilled legal counsel to help you understand how divorce will impact your assets and debts, contact me today for help. As an experienced attorney in Chicago, I can assist you in working through your divorce to help you reach the most favorable outcome.
