Options when Spouse Has Hidden Debt

 Posted on June 15, 2016 in Divorce and Finances

After you are married, any purchases you make, income you earn, and debts you take on are considered to be “marital property,” which means that you and your spouse are both responsible for and entitled to it. In contrast, debts taken on and purchases made prior to entering the marriage are known as “singly-held” property, which means that the individual who took them on is the only one responsible for them. Ideally, a married individual discusses his or her financial decisions with his or her spouse so the couple can make the decisions together. But we do not live in an ideal world and the reality is that a married individual can suddenly face collection attempts for debts that his or her spouse secretly racked up or a be held responsible for these debts during his or her divorce.

Prove That You Did Not Know about the Debt

Illinois is an equitable distribution state, which means that a married couple's assets and debts are divided among them according to the circumstances of their marriage and divorce. This is actually a better setup for individuals facing spouses' secret debts than how some states divide a couple's assets and debts, which is known as community property. In a community property state, all marital assets and debts are divided 50/50.

What you need to do is work with your attorney to prove that you did not know about the debt. This can be fairly straightforward if the debt is charged to a credit card that is in your spouse's name only. You can also prove that the debt was a non-family expense, as defined by the Illinois Rights of Married Persons Act. Under this act, creditors may only seek payment for debts against the individual who made took out the debt, rather than his or her spouse, except for in certain circumstances.

So What Can I Do?

Like hidden assets, hidden debts can make it difficult for the court to order a fair divorce settlement for a couple. Work with your attorney to uncover any hidden debts in the same way that you would uncover hidden assets: by having your attorney examine all of your former partner's financial statements to determine the debt and its extent. You can potentially cite this debt and its impact on your marriage during the division of your property.

Be proactive. If you suspect your spouse is hiding debt from you, be direct and ask him or her about it. Talk to your attorney about your concerns

Work with an Experienced Kane County Divorce Attorney

When you are married, your financial decisions affect you and your partner equally. When a couple does not communicate about their financial choices, one partner can quickly find him- or herself facing substantial debt that he or she knew nothing about. Come to us with your concerns and schedule your free legal consultation with our team of Kane County divorce attorneys at the Goostree Law Group so you can learn more about your options regarding your responsibility for your spouse's debt.

Sources:

http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2102

http://www.dailyfinance.com/2011/02/25/divorce-and-debt-what-you-owe-and-what-you-dont/