Common Questions About Debt in an Illinois Divorce Case

In every Illinois divorce case, the parties will have to address what happens to their property. What many do not realize is that debt is also a key component in the process. An Illinois allocation of debt attorney can provide information on your specific situation, but here are some answers to frequently asked questions about debt in divorce cases.

What Does Illinois Law Say About Debt in Divorce?

The Illinois Marriage and Dissolution of Marriage Act states that all “marital property” is subject to equitable distribution through divorce proceedings. The statute goes on to provide that marital property includes all assets, debts and other obligations acquired by one spouse – or both together – during the marriage. Therefore, the default rule regarding debt in a divorce case is that it will be divided equitably, which may not necessarily mean a 50-50 split. Equity means that the court will distribute assets and debts according to what is fair and reasonable under the totality of the circumstances.

How is Debt Considered Marital or Non-Marital?

The best way to answer this question is to state what is not considered marital property. Under the statute, non-marital property and debt includes:

  • Gifts and inheritances;
  • Any property or debt acquired before the wedding date;
  • Anything acquired after legal separation;
  • Any item or debt that the parties to a divorce specifically exclude as marital by agreement, such as in a prenuptial agreement;
  • Income received from property that is considered non-marital; and,
  • Other items listed by law.

If any of the above property is commingled with marital property to such an extent that it is impossible to tell what is marital and what is non-marital, the property will be considered marital. For example, if a person has $1 in his bank account and his souse puts $999,999.00 of non-marital funds into that account, it becomes impossible to tell where the $1 is in the account and where the $999,999.00 is in the account, thus all of the money will be considered marital. All property is presumed by the Court to be marital and it is the responsibility of the person claiming the assets to prove that that asset is premarital.

What if the Debt is Not in My Name?

The statute does not say anything about the debt being in your name or your spouse’s name because the focus is on whether it is marital in nature. Plus, the law also provides that any debt of the marriage belongs to both spouses, whether they incurred it individually or jointly.

Could I be Responsible for My Spouse’s Educational Loans?

There are many complex issues involved when looking at student loans of one spouse. Technically, the debt would be subject to equitable distribution if one party took it out during the marriage. However, the point of the loan is to get a degree, which benefits one spouse. It does not seem fair to make both pay, which is why there are additional factors on distribution when the debt is a student loan. They are:

  • Whether or not the borrower obtained the intended degree or credentials;
  • How long the marriage lasted after the borrower got a degree; and,
  • The way the loan proceeds were applied.

If the proceeds from the student loan went to housing expenses, instead of tuition or books, both parties benefited from it and it would be subject to equitable distribution. When the borrower did get a degree, and the marriage lasted for years afterwards, the court may also consider the debt to be marital property.

An Experienced Illinois Divorce Attorney can Assist with Allocation of Debt Questions

While the answers to these FAQs about debt may be useful, you probably have many other divorce-related questions. Our team at Glasgow & Olsson can provide the information you need, so please call our firm at 847-577-8700 or go online to complete a contact form. We can schedule a consultation to review your situation and offer helpful advice.

(image courtesy of Ryan Holloway)

This entry was posted in: 

And tagged: