How will our debt be divided in a divorce?
Most Americans today are straddled by debt. An estimated eight out of ten Americans are in debt in some fashion, according to financial data by Pew Charitable Trusts. Mortgages comprise the majority of debt for many of us, but others may be burdened by credit card debt, outstanding student loans, medical bills, and the like. In a divorce, your joint debt will need to be distributed, much like your marital property. Our Michigan divorce lawyers at McGuigan Law discuss what you need to know about debt division in divorce.
Separate vs. Marital Property
Debt is treated like an asset in a Michigan divorce. Michigan law divides property into two general categories: separate property and marital property. Separate property is any property acquired by either spouse prior to entering into the marriage. It can also include property received by inheritance or a gift to one spouse during the marriage.
In a divorce, separate property will generally be awarded to the party to which it originally belonged. However, separate property can become marital property if it is commingled or mixed with marital property. A divorce court will accordingly carefully trace the origin of all debts and the use of funds during the marriage.
Marital property is any debt or property acquired during the marriage. Under Michigan law, marital property will be equitably distributed between the spouse. This means that debt and marital property will be divided fairly, which might not be exactly equally. In dividing marital debt, some factors to be considered include:
- The source of the debt;
- Each party’s contribution towards acquisition of the debt;
- What the debt was incurred for;
- The earning power of the parties;
- The needs of the parties and children;
- The number of years the parties were married; and
- What property each party will receive in the divorce.
Michigan courts will generally aim to assign debt roughly equally in the divorce. Courts may depart from this approach if the circumstances so warrant. Parties that receive a greater share of marital property could receive more of the debt load.
If you are divorcing your spouse and concerned about how your marital debt will be divided, contact a divorce lawyer as soon as possible. Your divorce attorney will advocate on your behalf so that you receive only your fair share of the debt.