How to Address Debt Before Your Illinois Divorce | Lombard Divorce Attorneys
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How to Address Debt Before Your Illinois Divorce

Posted on in Family Law
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DuPage County divorce attorneysThe outcome of a divorce is heavily influenced by all aspects of the couple’s marital finances, including both assets and debts. Any marital debt remaining at the time of the divorce may need to be divided equitably between both spouses, and this can lead to complications with creditors in the future. Addressing debt before filing for divorce may help you to simplify the divorce process and protect yourself from financial liability.

Types of Marital Debt to Address

It may surprise you to learn that, as with assets, debts incurred by either or both spouses during the marriage are generally considered to belong to the marital estate, meaning that they will factor into the division of assets and debts in the divorce. Common marital debts that divorcing couples must contend with include home mortgages, credit card debt, and vehicle loans. Student loans may also qualify as marital debt if a spouse continued their education during the marriage, especially for the purposes of better providing for the family.

Options for Addressing Debt

Whenever possible, it is a good idea to be proactive about marital debt before initiating the divorce process. Possible strategies for minimizing the impact of debt on your divorce include:

  • Gathering your financial records: It is important to start your divorce with a clear understanding of your financial situation. Gathering documentation of all outstanding debts helps you to establish a complete picture of what you will need to address. It may be beneficial to enlist a financial professional to assist with this process.
  • Paying off what you can: It may be possible to eliminate certain marital debts before the divorce even begins. For example, you could make a plan to pay off a credit card balance, or to close out an auto loan that only has a few payments remaining. Doing so can reduce complications both during and after the divorce.
  • Negotiating with your spouse: Illinois allows divorcing couples to negotiate their own agreement on the division of marital assets and debts. If you are able to work with your spouse, you may be better able to ensure that each of you is left with a fair share of the remaining debt after the divorce.
  • Preparing to refinance: In the case of any joint debt, like a mortgage agreement entered into by both spouses or a credit card account in both spouse’s names, you may continue to be liable to creditors if the other spouse fails to make a payment. For this reason, it is often best to try to refinance in order to remove your name from any debt allocated to your spouse in the divorce.
  • Considering the benefits of bankruptcy: Bankruptcy is not always necessary or viable, and it can have significant implications on your credit score. However, couples who are struggling under unmanageable debt may find it beneficial to seek relief through bankruptcy before filing for divorce. Debt that is discharged through bankruptcy will not need to be divided during the divorce process.

Contact a Lombard Debt Division Attorney

At Mevorah & Giglio Law Offices, our experienced DuPage County divorce lawyers can help you understand how debt will influence your divorce and advise you on strategies to protect your financial interests. Contact us today at 630-932-9100 for a free initial consultation.

 

Sources:

https://www.ilga.gov/legislation/ilcs/documents/075000050k503.htm

https://www.thebalance.com/dealing-with-debt-during-divorce-960632

https://www.moneyunder30.com/the-financial-guide-to-dealing-with-divorce

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