When you think about your divorce, you are probably spending a lot of time thinking about what you want to happen to your house, 401(k) and fine china. But if you, your spouse, or the two of you have significant debt, you should spend some time thinking about that too. You could wind up responsible for all or part of your marital debt.
If you and your spouse have been married for several years, you have probably taken on debt together. You may have a mortgage on your house, student loans to pay for graduate school, auto loans, credit card debt, and the other common debts regular people need to enjoy a middle-class lifestyle in this country. The fact that your marriage is ending does not mean that your creditors will no longer expect to be paid.
Debt division in Michigan
Like most states, Michigan uses equitable division laws for property and debt division in divorce. All debts in both spouses’ names will continue to be their joint responsibility unless they agree to put the debt in one of their names solely and the judge agrees. This is common when, for example, one spouse will keep the family home. In exchange, that spouse will agree to be solely liable for the mortgage, so that the other spouse will not have their credit rating ruined if the house goes into foreclosure someday.
Debts taken out by one spouse alone may continue to be that spouse’s responsibility after divorce. However, if the judge determines that those debts were for the benefit of the family, they may assign some or all of it to the other spouse.
Debts in one spouse’s name that benefited both parties
For example, a spouse with a credit card in their name who used the card to pay for household expenses while the other spouse was out of work and accrued $10,000 in debt as a result may not be forced to pay off the entire debt themselves. Or if you took out student loans to go to college or graduate school and increase the family income, the judge could require your spouse to help pay off those loans.
Reaching a property division settlement that works for you
Like with valuable marital assets like the house and retirement accounts, your divorce attorney could have significant room to negotiate a creative and sustainable settlement of your debt. But it should be a settlement that you are comfortable with and can afford.
