Equitable Distribution Applies to Marital Debt
Marriage is something that most people associated with love and romance. However, throughout human history, marriage operated much like a business partnership. Courts still liken marriage to a contract between two parties. The law defines a contract as an agreement between two parties creating reciprocal obligations that are enforceable at law.
Most people understand that assets and property are divided between the parties in a divorce. However, like a business partnership, the parties in a marriage agree to jointly own the assets they acquire and share responsibilities for the liabilities they incur. Accordingly, when a partnership is terminated, the parties divide their jointly owned assets and liabilities—not unlike a marriage.
As a result, the rules of equitable distribution also govern the division of liabilities between the parties. Under Illinois law, all assets acquired during marriage are deemed marital assets. As a corollary, all debts incurred during marriage are considered to be marital debts and are therefore allocated equitably between the parties.
Differentiating Marital and Nonmarital Debt
Under equitable division principles, the distinction between marital and nonmarital debt depends on when the debt was incurred. Debts incurred before marriage are not typically considered to be a liability of the marital estate. For example, a car loan acquired before marriage is considered to be a nonmarital debt, and the party who incurred the obligation is solely responsible for repayment. In contrast, a home equity loan the parties obtained during marriage and used to discharge both marital and nonmarital outstanding debts is typically considered to be a marital liability.
However, when marital funds are used to pay a nonmarital debt, it can be considered dissipation of marital assets. Courts may consider dissipation of marital assets when equitably dividing property.
Get Comprehensive Legal Advice Today
Financial issues that arise in divorce proceedings can be difficult to understand. Because your financial condition is at stake, it is in your best interests to seek legal advice from an attorney with experience litigating property division issues in divorce cases. At the Law Offices of Jonathan Merel, P.C., our legal team is comprised of dedicated attorneys who have regularly handled cases involving the equitable division of assets and liabilities in a divorce. Our clients have grown to trust us to deliver quality legal advice and advocacy, and so can you.
To schedule an appointment with a skilled attorney from the Law Offices of Jonathan Merel, P.C. about exploring your legal rights, call us at (312) 487-2795 or contact us online today.