Many couples generally understand that when they divorce both their assets and their debts are divided equitably between them. Equity is not the same as equality; it is more related to fairness, which means that you may be asked to pay a debt that your spouse is not able to, because it will cause you less hardship. However, there are certain types of debt that must be handled in more specific ways, and it is important to understand what those may be.
Credit Card Debt
Like other debt, any amount incurred during the marriage is generally classed as marital debt, with certain exceptions, and marital debts are divided along with assets. Credit card debt is not exceptional in this respect. However, in Illinois, purchases made on a card only in one spouse’s name can deviate from the norm.
Unlike courts in other states which will simply lump all purchases in as marital debt, Illinois tries to examine who derived benefit from the items purchased or accounts paid off. The purchases will be classified as marital debt if it can be shown that the couple or family benefited from them, rather than only one spouse.
That said, most courts do elect to keep credit card debt primarily with the person who incurred it—if the credit card is in both spouses’ names, the debt will likely be divided equitably. If it is only in one spouse’s name, however, then it will be assigned to that spouse.
The rationale for this is that legally, the cardholder remains contractually obligated to the company, regardless of who gets assigned to pay that debt—like with mortgages or other financial obligations, a divorce decree is irrelevant with regard to the creditor’s right to be paid. If one spouse incurs the credit card debt and the other were assigned to pay it, he or she could simply refuse, out of vindictiveness or negligence, tanking his or her ex-spouse’s credit rating unfairly.
Student Loan Debt
As one might imagine, only one person receives direct benefit from student loans; namely, the ability to pay to earn a degree that might advance one’s career. However, it is often plausible to argue that both spouses (or the entire family) benefit, especially if the degree was obtained some years ago and the spouse’s career prospects have improved accordingly. If the spouse has been promoted or gotten a better job due to the degree, it will sometimes be held that it is appropriate to divide the student loan payments.
Essentially, student loan payments in Illinois are assessed like any other debt—using the list of factors found in 750 ILCS 5/503 to assess what the most equitable course of action would be. Who pays ultimately depends on issues such as earning potential, length of the marriage, standard of living, and the like. Still, even if one spouse is saddled with the majority of the student loan payments, it will likely be taken into account when dealing with issues such as spousal and child support. For example, in In re Marriage of Logsdon, the wife had student loan debt, but almost three-fourths of the amount was assigned to be paid by her husband, because he earned almost twice as much as she did.
Seek Experienced Legal Assistance
Divorce is never easy, and untangling marital and separate debts only makes it harder. Our passionate Wheaton divorce attorneys can help clarify matters for you, and ensure that everything is as it should be when all is said and done. Call us today to set up an initial appointment.