When you hear about your friend or co- worker’s divorce, chances are they talk about how much child support is being paid, or what they got to keep versus what their ex hung onto. Why? Because things like alimony and child support payments, custody agreements and how assets are divided are common divorce talk. Debts, however, are something of a tricky subject, and one that many people don’t like to talk about. Which means that debt don’t get a lot less press time.
The court divides both assets and debts!
Assets like cars, homes, the wedding china and the couches – they all get divided based on value and need, among other factors. But debts, just like your assets, also get divided between the two of you. So for those of you who might be considering divorce, here are some facts about how debt is divided during a divorce:
What Michigan law says about asset division:
Michigan law states that any division of marital property must be done by way of “equitable distribution”. And just to be clear, the term “marital property” refers to any and all things a married couple owns and owes. This might sound like it’s meant to be an exact 50/50 split, but it isn’t. The court is required to divide up your assets in the fairest way possible, which includes your debts.
What factors influence the court’s decision:
Because each case is decided based on a number of factors that influence the outcome, there is no hard and fast equation to help you predict what you’ll end up with. However, the factors that the court takes into account with each division are fairly standard. These include:
- The duration of the marriage
- The needs of each spouse after the divorce
- The needs of the children, if any
- The earning potential of each former spouse
- The original source of the assets and/or debts
- The cause of the divorce, including whether or not there is one individual to blame for the breakdown of the marriage
Will we each have to pay off our own debts?
Bear in mind that debt specific to one person, like payments for a car that one spouse bought and still drives, is more likely to be assigned to that person. But isn’t always the case! Sometimes debt that one person accrued, but that both spouses benefitted from, will be divided between the exes. Also, debt brought into the marriage from before, like student loan debt, is unlikely to be divided between spouses, or reassigned.
How will I know what debts are my responsibility?
When the court divides up a married couple’s assets and debts, everything that each person is responsible for will be clearly indicated in the divorce judgement. No one can claim they didn’t know they had to pay off the car, or they had no idea that they got stuck with the credit card payments. Every aspect of the debt and asset division will be spelled out for you in your paperwork, so be sure to read your divorce judgement completely!
Are you worried about how the court will divide your debts and assets?
Although the court has to sign off on every divorce agreement, they don’t have to be the ones to assign the assets and debts. If you and your spouse can agree on a fair and equitable division beforehand, the court will likely honor it. But dividing your property fairly is easiest when you have an attorney making sure that your best interests are represented.
If you are considering divorce, and have questions about how your marital property will be divided up, call The Kronzek Firm at 866 766 5245. Our skilled family law attorneys are available 24/7 to help you prepare for this difficult time in life, and ensure that your interests are protected.