Division of Debt
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DuPage County Debt Division Attorneys

Debt Division in DuPage County

Aurora Lawyers for Marital Debt Division in Divorce

When considering both secured accounts, such as mortgage loans and car notes, and unsecured accounts, such as credit cards and medical bills, marital debt can almost exceed marital assets, even in a relatively high-asset divorce. Since money going out has the same value as money coming in, these debts must be equitably divided so that the divorce is not an undue short or long-term financial burden on either spouse. When dividing debt, the court looks to a number of factors.

The attorneys at Pesce Law Group, P.C. can craft a plan that both divides the estate equitably and protects your legal and financial interests. We believe that one of the cornerstones of effective representation is consistent communication. We always endeavor to keep you up-to-date regarding developments in your case, and we promptly respond to your e-mails and phone calls, so you are never in the dark.

Factors to Consider

The same law that controls asset distribution - Section 503 of the Illinois Marriage and Dissolution of Marriage Act - also governs debt distribution. Generally speaking, a judge may look to:

  • Dissipation (i.e., waste) of assets,
  • Contribution of each spouse to the debt,
  • Short and long-term economic circumstances of each party,
  • Any agreement between the spouses,
  • The duration of the marriage, and
  • Relative age and health of each spouse.

The judge can also consider any other relevant factor, except for the marital misconduct of either party, to make an equitable division.

Specific Issues

The title and the note are two separate documents. While the divorce decree may transfer legal title to a house, car, or other asset, it has no effect on the security agreement, if any. For example, Husband may acquire legal title to the marital residence after a divorce. However, assuming that both he and Wife signed the security agreement, they are jointly responsible for the note. This issue often comes up when one spouse seeks a loan modification, and the bank will not execute the change without the other spouse's written approval. The only way to remove the other spouse's name from the note is via a traditional refinance or mortgage assumption.

Or, assume that Husband bought Wife a car during the marriage and Wife obtained title to the car in the divorce. If Husband stops making the payments, or violates the security agreement in any other way, the finance company may repossess the collateral.

The payment mechanism may also be an issue. Direct debt payment in lieu of alimony has income tax consequences, because the IRS considers most spousal support payments tax deductible to the payor. 

An equitable debt division is an important part of a divorce property settlement. For a free consultation with experienced and dedicated family law attorneys, contact Pesce Law Group, P.C. at 630-352-2240.

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