Efficient solutions are not always easy. I am completely prepared to pursue your debt division interests through heavy resistance from your spouse’s legal team.
You Could Be Accountable for Your Spouse’s Debt
When spouses sign jointly for lines of credit or loans, it creates joint responsibilities — you are liable for these debts even when you decide to dissolve the marriage. Moreover, spouses can be held accountable for paying off the debt on loans and credit cards that are not in their name but were accumulated during the marriage. This decision is based on many factors, including each spouse’s:
- Assets
- Income and finances
- Personal situation
- Physical, mental, and emotional health
My team of attorneys and I at the Law Office of Fedor Kozlov, P.C., understand how critical these property and debt matters are and we know the Illinois law. We also understand how frustrating and complex debt division can be for those not accustomed to the way family law procedures work.
We are committed to working closely with each of our clients during the course of their divorce. Our goal is to inform you fully of your rights — and to prevent you from being burdened with debt that you should not be held accountable for in the first place.
We start with the most efficient solutions: proposing measures to reach a fair settlement where neither spouse is left at a disadvantage. If the other side does not see reason during these initial negotiations, we are prepared to defend your rights and interests in formal litigation.
The Settlement of Debt During Divorce
There are two ways couples can deal with debt during divorce. The first is to pay off debts before getting a divorce. The second is to divide debt during the process of property division.
In most divorce cases, the best option is to pay off the debt before the divorce, as it makes property division easier. Moreover, it ensures that you do not face any lawsuits in the future from lenders if your ex-partner is unable to pay off their share of debts.
This does not mean, however, that you should go about paying off your marital debts independently. As soon as divorce is a possibility, the division of property also becomes a possibility. If you make independent decisions about using your marital assets in any way, even if your motives are completely pure, it could end up hurting your position during negotiations.
Settlement does not have to be a friendly process, but you do generally have to formalize agreements about what you intend to do before taking action. Here are just a few of the things that you would usually discuss and put in writing:
- Who is responsible for which debts
- Which creditors you should pay during settlement, and in which order you should pay them
- The repayment schedule in general
- Where the money will come from: liquidation of assets, shared bank accounts, separate property, and so on
- The allocation of tax burden for any and all transactions related to the repayment of your debt
- Who will be responsible for executing the repayment transactions
- How the settlement of debt will influence the distribution of marital property
- How to handle any type of collateral, including securities, real estate, vehicles, and so on
- What type of accounting and recordkeeping practices will be used to document payments
- Whether you will use any type of financial service, such as debt consolidation or balance transfer
In a normal situation, you might make any or all of these decisions independently — sometimes even without giving them a second thought. However, in divorce, it is often wise to maintain as much accountability as possible. There are two main purposes for this level of attention to detail: to avoid conflict and to promote a fair deal.
Dealing with these details can be difficult, especially while navigating the other complicated concerns of divorce. We can help by presenting clear, actionable advice that works in the context of your unique situation.
An Overview of How To Divide Debts in Illinois Divorce Court
Although settling before divorce may seem like the best, most logical course of action, emotions run high during these sensitive negotiations. Additionally, it is not always easy for either of the spouses to settle their debts before the divorce, and they might have to resort to the second option: contested division.
Illinois law defines “marital property” as “all property, including debts and other obligations, acquired by either spouse subsequent to the marriage…”. The statute then continues to list a large number of qualifications and exceptions.
Determining Who Is Responsible For Debt
Determining who is responsible for the debt is a complex process that references both Illinois statute and legal precedent. Generally, judges consider several factors to decide if the debt is a separate liability of either spouse or if both of them are liable for it. Similar criteria are used during this process as are used for property division, such as:
- When the debt was acquired
- Whether a spouse intentionally accrued debt (or dissipated assets)
- The disposition of collateral property
If both parties are liable for the debt, the court will either divide the total in a way it deems fair considering the specific circumstances of each spouse. A judge might also decide to simply split it equally between the two spouses. Some of the considerations in this decision might be:
- The financial and professional circumstances of both spouses
- Who benefited from the loan
- Spousal maintenance, child support, and parenting responsibilities
- Many other factors the court deems relevant, including the other items in the property division agreement
Debt Divided By Spouses
Since each case is different in one way or the other, it can be difficult to decide which debt should be considered separate and which should be subject to division. In general, however, there are debts that are typically divided between spouses:
- Balances on jointly held credit card and other joint lines of credit
- Medical bills
- Money owed to the IRS (filing jointly with joint contribution to the tax liability)
- Jointly signed loans, including home mortgages, personal loans, and car loans
- Credit card debt accumulated during the marriage
- Debt (of all types) held by a mutually owned business
For these types of shared debts, Illinois courts might consider various factors before deciding on a division plan. The following, for example, could inform an unequal — but still equitable — division of debt:
- The financial circumstances of both spouses, including the ability to pay loans back
- Spousal maintenance, child support, and parenting responsibilities
- Other factors the court deems necessary to consider
Knowing what the court might consider can go a long way towards getting the fairest possible debt division in your divorce. Please reach out to one of our attorneys so we can start analyzing your unique case.
Complex Types of Debts
Most couples have some complicated debt, both financially and emotionally. To make matters more complex, there are some situations during property division that blur the line between debt and financial losses. Here are a few examples:
- Student loans: Student loans might be marital property to a certain extent, depending on various factors. These include how the money was used, when it was used, who benefited from the loan, and whether a degree was acquired.
- Gambling losses: Gambling losses could be assigned to the gambling spouse, even if they do not result in other types of debt, such as personal loans. Typically, this would happen through the non-gambling spouse claiming dissipation of assets.
- Individual credit cards: While joint credit card debts are typically marital property, complications could arise in certain situations. An example might be if one spouse holds the account individually and the other one is an authorized user.
The court weighs several factors when deciding on these types of complex debt division issues. However, judges cannot use information that they do not have. You need an attorney to help communicate the details of your case so that the court can make an informed decision.
Contact Experienced Debt Division Attorneys Today
There are many intricacies involved in the distribution of marital debt under Illinois Law. Please consider seeking legal help from an experienced debt division attorney. Our team has the knowledge, background, skill, and dedication to help you understand your rights and get fair debt distribution.
At the Law Office of Fedor Kozlov, P.C., we carefully review your financial situation and evaluate all possible solutions that are in your best interest. We then present them to you so you can act on our analysis.
For more information about debt division and how our attorneys can help you, give us a call. Contact the Law Office of Fedor Kozlov, P.C., today at (847) 241-1299 to schedule a consultation.