When you got married, debt and property division was probably the last things on your mind. If a marriage does end in divorce, questions arise about who will keep which pieces of property, such as bank accounts, furniture, or real estate. In an ideal situation, the couple can make this decision together, but unfortunately, it’s often left up to the attorneys to negotiate on their behalf.
It’s necessary to realize that property division also includes the division of debts.
So, does debt division play a role in divorce? In Michigan, the marital debt and property are divided equally; however, a judge may choose an unequal division during specific situations. The debt stays with the property. If only one person can afford to pay for the item, the person keeps the property.
If you or your spouse are considering divorce, both property and debts must be divided. This division will have a significant impact on your future, so you need to be prepared. The best way to do this is to find an attorney and then discuss with them your options and what to expect during the division process.
What’s Considered Marital Property?
The family home is where you and your spouse lived together while you were married. The two of you should decide if you’re going to keep or sell the house and who can afford to pay the mortgage, insurance, property taxes, and upkeep. If neither person can afford it, the only other choice may be to sell it.
If the two of you can’t decide who should keep the home, it’ll go before the judge. The judge will then determine who should get it or if you should sell it. Until the house sells, both will be responsible for the mortgage payments. Once it sells, the judge will then split the money between the two of you. Or, if there’s a balance due, the balance will be divided between you.
Pensions and retirement plans are normally considered marital property. In a divorce, the non-employed spouse is entitled to part of the money from their spouse’s pension or retirement plan. There are times when both parties decide not to split the retirement income and choose to keep their own.
What’s Considered Separate Property?
Separate property is property owned before the two of you got married. Typically, individual property goes to the spouse who originally owned it. There are times when the separate property will be divided, such as if the other spouse contributed to improving it or growing it or if the other spouse’s share of the marital property isn’t enough to meet the spouse’s needs.
Determining if the property is marital or separate can be confusing, so you should talk to your attorney to help determine what property is marital and separate.
Marital Vs. Separate Debt
Marital debt consists of debt that’s acquired during the marriage, while separate debts are incurred before the two of you were married. It doesn’t matter who made the purchase or whose credit card was used. There are some exceptions to this rule, such as:
● Gambling debts
● Money spent on extramarital affairs
● Debts acquired during the marriage it was used for one spouse’s education
Secured Vs. Unsecured Debts
What’s the difference between these two types of debt? Secured debt is connected to a mortgage or car through an auto loan. Unsecured debt is debt with no asset attached that the lender could repossess if the debt is not paid. Unsecured debt is divisible in a divorce. The first step in the debt division is to determine if it’s secured or unsecured; again, your attorney can help you choose the answer to this.
Should You Sell Property Tied to Secure Debt?
The person who is awarded the property tied to the property is also responsible for the debt. Sometimes only one person can afford to pay the debt, so they are the ones that keep the property. That being said, the two of you also have the option of selling communal property.
For example, if you have a car loan, you can sell the car, pay off the loan, and then split the rest of the money. Frequently the issue that comes up as a secured debt is the family home. You and your spouse can determine if you want to keep the house or sell it. One thing to remember is that whoever lives in the home is responsible for the upkeep, and these costs won’t factor into the divorce.
The Judge’s Decision Does not Bind Creditors
The judge does not have authority over your creditors. The judgment of divorce can assign debts to one spouse or the other, but if the spouse assigned the debt doesn’t pay it, the other spouse may be responsible. All obligations in both of your names must be included in the Judgement of Divorce. If you must pay the debt, the judge can order your spouse to repay you.
Overall
When a property is involved, you may want to hire an attorney to help you sort things out, especially if the two of you have secure cured or unsecured debts. An experienced divorce attorney in your area can help you understand the laws pertaining to property and debt division in divorce.
Our Divorce and Family Law Services in Livonia has the local expertise to navigate the aspects of your Michigan divorce with success. At Tower Karson Law we are dedicated to making the process as efficient and painless as possible. Since every divorce is different, we address every case with an individualized, custom approach. Handling everything from legal separation to child custody and support, property division, spousal support and so much more, our divorce lawyers have the compassion and understanding to help you get through the process. Call for a Free Consultation about your family law issue today.