Debt and Property Division in a Michigan Divorce

Debt and Property Division in a Michigan Divorce

When a marriage ends, everything owned by the couple is divided. Most people worry about their assets being subject to division, but it is also important to consider the debts that will be divided. If you are going through a divorce, or are about to, our Michigan family law attorneys will help you prepare for the future, including the equitable distribution of any debt you and your spouse carry.

Separate Debt vs. Marital Debt

Before determining how debt may be divided during your divorce, it is important to understand the difference between separate debt and marital debt. Generally speaking, separate debt is any debt one spouse incurred on their own prior to the marriage. Only the person who incurred separate debt is responsible for repaying it.

On the other hand, marital debt is any debt incurred by the couple during the marriage. This can also include debt taken in one person’s name only, particularly if that debt contributed to the marital household. Both spouses may be responsible for repaying this debt, even if they were not the ones to incur it in the first place.

Under the equitable distribution property division laws in Michigan, only marital debt is divided in a divorce. The court will divide the debt fairly, although not necessarily equally.

How Marital Debt is Divided

The family courts in Michigan will take many factors into consideration when dividing marital debt. These may include:

• Ability to repay the debt: The court will look at the income of each spouse, or their earning potential to determine which party is best able to repay the debt.
• The reason for the debt: Some debt is considered ‘good debt,’ meaning it is incurred as an investment. Many types of good debt are considered marital debt because they benefit the couple. For example, a mortgage loan could have allowed the couple to purchase a marital home. In these cases, the court will likely determine that each spouse is responsible for part of the debt. On the other hand, if one spouse incurred debt due to a gambling problem or affair, the court will likely determine that the spouse that incurred it is responsible for paying it.
• Debt attached to property: When debt is attached to property obtained by one spouse during the divorce, such as if one spouse keeps the vehicle, that individual is likely also going to be responsible for the debt attached to it.

It is important to remember that creditors do not consider divorce decrees when collecting on debt. Whenever debt is not assigned to you in divorce, it is important to remove your name from it or the creditor can still come after you for the debt.

Our Divorce Lawyers in Michigan Can Protect Your Financial Future

The division of marital debt is just one legal issue you will face when going through a divorce. At Iafrate & Salassa, P.C., our Michigan divorce lawyers will help you navigate the entire process, and give you the best chance of a positive outcome. Call us today or contact us online to schedule a free consultation.