Am I Responsible for My Spouse’s Debt after Separation?
The basic answer to this question is “no, you are not responsible for your spouse’s debt after separation.” However, this answer requires further explanation.
Typically, you would not be responsible for your spouse’s new debt incurred after legal separation. You and your spouse would each individually pay your own new debt you run up after the date of legal separation. Legal separation in Illinois is not the same as simply living apart in separate residences. It is a court-approved process in which you receive a judgment that sets out your changed legal status and describes your rights and obligations. While you cannot remarry when you are legally separated, you can get legal protections to help safeguard your financial future.
If your separation is not made legal, and you are just living separately but not changing your legal status, you could be on the hook for paying new debt your spouse takes on, especially if he or she used a joint credit card or other shared account.
How Can Legal Separation Help Protect Me from My Spouse’s Debt?
If you and your spouse no longer wish to live together but you aren’t ready to divorce, or you have no plans at this time to divorce at all because of health insurance benefits, religious objections to divorce or other reasons, legal separation can separate you financially from your spouse and thereby help to protect you from your spouse’s debt.
Legal separation is similar to divorce in that you petition the court to separate, and you negotiate the terms of your separation in an agreement that you, your spouse and the judge sign. Once it is signed by the judge, it becomes a legally binding court order. In general, you would not be responsible for any new debt your spouse incurs following the date the court grants the order. The same would be true for your spouse. Without the protection of legal separation, however, new debt your spouse runs up after you aren’t living together may still be considered marital debt, which is the responsibility of both of you.
Legal Separation is a Complex Process that an Attorney Can Help With
Legally separating can be complex and involves many of the same decisions that divorcing does, including who will pay for what debt, which can become a very sensitive subject for spouses to navigate. It is helpful to have the assistance of an attorney during the process who will help to ensure that your rights and interests are protected, that joint debt is fairly divided between you and that you are not taken advantage of by a spouse who intentionally runs up debt in order to get back at you.
What Happens To Marital Debt After Separation?
What is marital debt? Marital debt is generally considered any debt that was incurred during the marriage, whether it was for the benefit of the household or of just one spouse. It could also be debt that you took on in a joint account together leading up to your marriage. Marital debt is the responsibility of both spouses. Separate debt is usually considered to be debt that each spouse already had before marrying and, unless it became intermingled with household finances, would usually only be the responsibility of the spouse who had it before marriage.
If you and your spouse are able to agree, you can document for yourselves in your separation agreement who will pay what debt. If needed, your attorneys can help you with this process to help ensure fairness to both sides. If you are unable to agree between yourselves, mediation may be an option. If your separation leads to divorce, you may be able to incorporate the terms of your separation agreement, including regarding debt, into your divorce decree. If you are unable to decide on debt division between yourselves, you can ask the court to make the determination for you if you both agree to do so.
Dividing Debt Using Equitable Distribution
When you can’t agree on debt division when legally separating or who will pay what debt in divorce and the court must decide, the court will use the rule of equitable distribution, which is also used to divide property and assets in divorce. You can read about the Illinois law governing asset and debt division here.
Equitable distribution is not a 50/50 split of debt. Instead the judge will divide your debt in a way that he or she deems is fair and equitable for your individual situation. To do this, the judge will look at a variety of factors that include things such as the following:
- How each spouse contributed to incurring the debt
- What the debt was for and who it benefitted, whether the household or one party
- The length of the marriage
- The financial status and needs of each spouse
- Who has custody of children
- Whether spousal support is being paid
- If there is a pre- or post-nuptial agreement to shield a spouse from debt.
Judges have leeway in deciding what is fair in splitting debt. If one spouse has significantly more financial resources than the other, they may get a larger share of debt. Determinations as to who will get what assets also factor into who gets what debt. If one spouse is responsible for running up most of the debt and it was not for the benefit of the household, that spouse may get a greater share of debt responsibility. If a spouse spent money on an extramarital affair or has gambling debt, that spouse may inherit those debts, as another example.
Every case is different when it comes to dividing debt in separation and divorce. The court will consider any factors that it needs to in making division determinations. To get specific answers for your unique situation, speak to a knowledgeable family lawyer in Illinois.
Protecting Yourself from Responsibility for Your Spouse’s Debt
What can you do to help protect yourself from responsibility for your spouse’s debt and to reduce the debt burden you will have after separation and divorce? One thing you could potentially do, if your spouse is in agreement and you have the financial means, is to pay off shared debt before legal separation or filing for divorce. That way, once you begin your new lives, you will not be burdened by bills left over from your marriage. Of course, paying off all debt before separating or divorcing is not an option for many people.
If completely paying off joint debt is not an option for your situation, you and your spouse could possibly agree about how much of each debt each of you will pay and transfer the respective amounts to separate credit cards or loans. Then when you separate or divorce, you will have your respective debt to pay off, but there will not be a shared responsibility.
You should also seek to cancel joint credit cards or loans before your separation or divorce. That way your spouse cannot run up new charges for which you could be held responsible.
Finally, even if you have a court order that obligates your spouse to pay for certain shared debts, credit card companies and other lenders could pursue you if those payments are not made. Creditors do not care who is paying for what—they just want to be paid. If your name is on a loan or credit card along with your spouse’s, they may come after you for payment. If your spouse is not paying the debts they are obligated to pay following separation or divorce, reach out to a family law attorney to learn what recourse you may have.
Who Pays What Debts Incurred After Separation? Get Answers for Your Situation.
Contact the Experienced Illinois Family Law Attorneys at Wolfe & Stec
Understanding who is responsible for what debts in separation and divorce in Illinois can be frustrating and confusing, especially if you have significant joint and commingled debt. When you are separating from or divorcing your spouse and starting a new life, you want to start without financial entanglements from bills run up in your marriage. You want to know what your financial responsibilities and obligations are for paying the bills going forward and you sure do not want any unpleasant surprises down the road.
The experienced family law attorneys at Wolf & Stec will examine your marital, personal and financial situations and help you determine what debts are separate and what may be considered marital debts and represent your interests in getting a fair outcome in debt division. Additionally, if your spouse or ex-spouse is not paying the bills that they are responsible for paying per the court’s order, and you are being pursued by creditors, we can advise you of your options for resolving the situation.
We provide free initial consultations. Call Wolfe & Stec today at 630-305-0222 to arrange a time to speak with a knowledgeable and compassionate attorney. We work hard to get the best possible outcomes for our valued clients.