When you and your spouse file for divorce, you may know that your assets will be divided during this process. What you may not know, however, is how joint debts are divided during this process. In Peoria County and throughout Illinois, debts are divided based on equitability, meaning the court will consider each spouse’s shared financial responsibility for matters like credit cards, loans, and mortgages, in accordance with Illinois’ equitable distribution method of marital property. A Peoria County marital property division lawyer from our firm can help you address these debts and ensure that you don’t end up with an unfair deal that puts more of the burden on you.
When Are Debts Joint Debts?
Handling joint debts in a divorce requires the court to determine who is ultimately liable for shared financial obligations. In Illinois, the courts will divide this based on fairness rather than an automatic equal split.
Any debts accumulated during a Peoria County marriage are considered joint debts. This can include obligations that you and your spouse make together, like taking out a mortgage. It also includes your individual credit card bills, if one or both of you are carrying a balance at the time you get divorced.
Any debts that you or your spouse racked up before marriage should be considered separate debts. If you owned a home or a car or you had student loans before you got married, those should remain your responsibility.
Key Differences Between Joint and Separate Debt
- Joint Debts (Marital)
- Includes mortgages, joint credit cards, personal loans, and other joint financial obligations
- May include individual credit card debts accumulated during the course of the marriage
- Separate Debt
- Generally, it includes debts acquired prior to marriage
- May include certain debts accrued during the marriage
- Critical Distinction
- Courts focus on when the debt was incurred, not just whose name is on the account
Understanding whether a debt is classified as joint or separate is one of the most important steps in determining how it is divided in a divorce.
How Is Debt Divided in an Illinois Divorce?
Illinois adheres to the equitable distribution of marital property, which includes debts. As such, debts will be divided based on each spouse’s circumstances and contributions, rather than an automatic even split of assets. As such, the courts in Peoria County and across the state will consider a number of financial and personal factors when determining how responsibility for joint debts should be divided.
Factors Considered by the Court When Dividing Debt
- The lengths of the marriage
- The standard of living established during the marriage
- The age and health of each spouse
- Each spouse’s income and personal financial assets
- Contributions to marital property or the accumulation of debt
- Any pre- or post-nuptial agreements created by the couples
- The tax consequences of debt allocation
- The overall financial fairness of the division of the debt
How Can You Negotiate Over Joint Debts?
The court will try to split up your assets, including joint debts, in an equitable fashion. Litigation is not the only way to divide your property, though. Mediation offers you and your spouse the chance to talk through issues, like what will happen with joint debts, with the help of a neutral mediator. You could also address issues like these through collaborative divorce, where you work with your lawyers and a team of professionals to find areas of agreement.
It’s important to negotiate over joint debts because you probably don’t want to be stuck giving more of your money to creditors than you should. Yes, any debt run up during marriage is a joint debt, but let’s say that your spouse had a big spending problem or a gambling addiction. You shouldn’t be stuck paying off those kinds of liabilities, and a Peoria lawyer can help you make a deal that prevents you from taking on an unfair burden.
Common Negotiation Strategies
- Debt-for-Asset Tradeoffs
- One spouse assumes more debt in exchange for more assets
- Refinancing or Balance Transfers
- Move the debt into the name of one spouse when possible
- Debt Payoff Prior to Divorce Finalization
- Can help reduce the risk of future disputes and risk to each spouse’s credit
- Addressing Unequal Spending
- Courts may assign more debt to one spouse if they irresponsibly accumulated it through reckless spending
How Can You Protect Your Credit During an Illinois Divorce?
It’s important to understand that divorce does not automatically remove one spouse from liability for joint debts. Creditors do not have to abide by the outcome of a divorce agreement. As such, if the court assigns a certain debt to your spouse but your name is still on the agreement with the lender, you can still face liability for repayment.
Steps to Protect Your Credit
- Monitor all joint accounts to look for missed payments
- Pay off joint debts when possible before finalizing your divorce
- Close and freeze all joint accounts to prevent new charges
- Remove yourself as an authorized user on accounts when possible
- If possible, refinance joint loans into one spouse’s name
- Regularly check your credit report for errors or unauthorized activity
Taking proactive steps to protect your credit during a divorce can help prevent long-term financial damage and ensure a smoother transition following the finalization of your divorce.
What Happens If My Ex Files For Bankruptcy?
Filing for bankruptcy can delay a divorce, especially the negotiations over property division in Peoria County. The bankruptcy court would have to determine which assets belong to your spouse and if they can be sold off to satisfy creditors. The bankruptcy filing could also affect your joint properties, though.
If your spouse files for bankruptcy, you should definitely get the advice of a divorce lawyer in Peoria. You’ll need to know more about what to expect from this process and what kinds of complications could arise.
How Bankruptcy Impacts Joint Debts
- Bankruptcy can temporarily pause divorce proceedings
- Joint debts may ultimately be your responsibility if your ex receives a debt discharge
- Creditors can still pursue you for joint debts and obligations
- Liquidation of assets can impact shared property
Talk to a Peoria Divorce Lawyer Today
So if you want to make sure that your joint debts are dealt with fairly, Butler, Giraudo & Meister, P.C., is ready to fight for you. Our experienced divorce lawyers can help you negotiate a fair divorce agreement. Contact us today to learn more
