Debt Division in a Divorce: What Do You Need to Know?

Debt Division in a Divorce: What Do You Need to Know?

By: M. Scott Gordon

Anyone who is considering divorce in Chicago or the Chicago area should know how property division works and what to expect when it comes to the division of marital assets and marital debt. Under the Illinois Marriage and Dissolution of Marriage Act (IMDMA), all marital property gets divided based on a theory of “equitable” distribution. While most people are thinking about assets when they consider how the property division process will play out, it is important to consider the role marital debt plays in this part of any divorce. Like marital assets, marital debt also gets divided between the spouses in a manner the court decides is equitable, based on a variety of statutory factors.

We want to provide you with some more information about debt division in a divorce and what you need to know as you go forward with your divorce case.

Classifying Debt as Separate or Marital Property

First, and most importantly, the court will need to classify debt either as separate property or marital property before it determines whether it needs to divide that debt in the divorce. Just like assets, debt acquired before the marriage is usually considered separate property, while debt acquired after the date of marriage typically is considered marital property (and thus will be divided).

However, there are exceptions. If the parties have a prenuptial agreement, which clarifies how debt will be handled in a divorce, or how particular debt will be classified, the court will uphold the terms of the agreement if they are enforceable under Illinois law. Another possible exception is when debt is commingled. Although we often think about commingled property as one spouse combining separate assets with marital assets, debt can also become commingled. For instance, if one spouse accrued significant debt prior to the marriage but the couple set up a joint credit card account and transferred that debt into that new card, the classification of that debt might not be so clear, especially if new post-marriage debt is added to the card.

Dividing Debt According to What is Equitable to Both Parties

Just as the court looks at multiple statutory factors to decide how assets should be distributed, it will look at those same factors to determine how debt should be distributed between the spouses in such a way that is fair to both. Some of those statutory factors include but are not limited to:

  • Income of each party;
  • Separate property of each party;
  • Needs of each party;
  • Realistic earning capacity of each party; and
  • Standard of living established during the marriage.


Contact a Divorce Attorney in Chicago

Property division can be very complicated, especially when there are significant assets or significant debts in a marriage. In some cases, if there is such a substantial amount of debt that both parties in the marriage may consider filing for bankruptcy individually once the divorce is finalized, it could make more sense to file for bankruptcy jointly prior to filing for divorce. This could make the process of property division easier for both spouses.

An experienced Chicago divorce attorney can go over the details of your situation with you and help you to decide how to proceed with your divorce. Contact Gordon & Perlut, LLC today to learn more about our services.