Your marital debts are just as much a part of a divorce as your assets. Understanding what counts as marital debt can make a significant difference in your outcome.
Marital debt vs. non-marital debt
Illinois law generally treats debt acquired during the marriage as marital debt, up until a court enters a judgment of dissolution or declaration of invalidity. A statutory judgment of legal separation classifies any subsequently incurred debt as non-marital property under Illinois law. Courts can also look at when the debt was incurred, what it was used for, and whether it benefited the marriage when deciding how to classify and divide it.
Debt you took on before the marriage typically stays with you, as does debt tied to property you owned before the marriage. Illinois courts generally treat these as non-marital debt and do not subject them to division. Paying off pre-marital debt with marital funds does not convert it into a marital liability, though the marital estate may be entitled to reimbursement.
In Illinois, debt incurred during physical separation but prior to a final divorce decree is legally presumed to be marital debt, unless it is proven to constitute a dissipation of marital assets.
How Illinois divides marital debt
Illinois courts divide the marital estate in a way that is fair, but not necessarily equal. Courts may consider the overall marital estate and relevant statutory factors when allocating debts and assets. The judge may consider each spouse’s income, earning potential and economic circumstances before deciding what a fair split looks like.
The creditor risk you need to know about
A divorce decree only governs what you and your ex owe each other. It does not change your original loan agreements. If your name is on a joint account and your ex fails to pay, the creditor can still come after you. Your credit report may take a hit regardless of what the court ordered.
Steps you can take to protect yourself
Refinancing a joint loan into one spouse’s name can help, but only if that spouse can qualify for the loan independently. Consider closing shared accounts and opening individual ones.
You might also want to include an indemnification clause when finalizing your agreement. This lets you seek repayment from your ex if you end up covering their assigned debt. Monitoring your credit report after your divorce can help you catch problems early before they cause lasting damage.