Divorce is a complicated process full of lots of bureaucratic hoops to jump through, not the least of which is the division of debt. Everyone understands that marital property is divided in a divorce but many people have the misfortune of overlooking martial debt when considering this division.
Today we’ll look at just exactly how Michigan aims to divide marital debt in a manner that is fair for the circumstances of each divorce. To do so we’re going to first need to understand the difference between separate debt and marital debt, as well as Michigan’s equitable distribution policy. With an understanding of these two subjects in place, we’ll be able to look at the factors that go into dividing debt in a Michigan divorce.
What’s the Difference Between Separate Debt and Marital Debt?
Separate debt and marital debt function much the same way that separate or marital property does when it comes to divorce. Each spouse has lived a full and enriched life prior to the marriage and as such, they will come into the union with certain debts of their own. For example, say the couple met at college. Well, the debt associated with taking out student loans would be separate debt that they each had.
After getting married the couple decides to start a business venture together and take out loans to cover the initial cost. But the business doesn’t take off but they still have to pay off those loans. This time around, because they were already married, the debt is considered to be marital debt.
When it comes to dividing debt in a marriage, the court is only interested in the marital debt. Each spouse’s personal debt is just that: personal. They are responsible for paying it off on their own. One spouse might help another in paying off their debt but the debt itself is separate from the marriage.
If you are looking to get an idea of how things are going to be divided in your upcoming divorce, it’s a good idea to make a list of all the different debts that you have and then divide them into separate or marital debt categories. Your separate debts can be put to the side for later but the marital debts could be split up.
How they will be split up will depend on a number of factors. But before we get to those factors we must first look at Michigan’s equitable distribution principle as it will be key to this discussion.
What is Michigan’s Equitable Distribution?
Michigan is not a community property state. In states of this nature, the distribution of property and debt is divided as close to a 50-50 split as possible. This can actually result in some unfair division of property or debts, however, because in sticking as close to 50-50 as possible the state fails to take into account the specifics of the couple’s circumstances.
Michigan gets around this unfairness by instead using the theory of equitable distribution. This is a technique for approaching the distribution of property and debts from the viewpoint of fairness. Rather than focusing on splitting the couple’s property and debts evenly, Michigan instead takes into account a variety of factors that are unique to each spouse’s circumstances.
This technique results in a much more fair distribution but at the same time, that fairness might not be as welcome as it sounds. For example, if one spouse has a high-paying job while the other doesn’t then more of the debt could be given to that individual. Their ability to pay off the debt with fewer issues means that they could take on more of the debt in a divorce. It may seem unfair to that individual at the time, however.
It also means that it is more difficult to estimate how your marital debt will be divided in a divorce. There is no simple formula that you can follow, such as dividing it 50/50. Instead, each divorce will require calculations based on a number of factors that are unique to that marriage and that marriage only. Let’s take a look at some of the factors that will go into determining this division of debt.
What Factors Determine the Division of Marital Debt in a Michigan Divorce?
Since the principle of equitable distribution means that debts are divided fairly, if not necessarily equally, one of the best ways you can get an idea of how debts could be divided during your divorce is to consider the same factors that the courts will consider.
Keep in mind that we are only able to give a limited example here, as no two divorces play out the same. So if you need more help in determining how your debts may be split, you will want to contact an experienced divorce attorney such as those we employ.
Factors that go into determining the division of marital debt in Michigan are:
- Your Ability to Pay the Debt: The court looks at each spouse’s income and potential earning capability to ensure they don’t hand too much of the burden to someone that won’t be able to handle it.
- How the Debt was Incurred: Some debts may be divided solely to the individual that incurred them, such as when one spouse has a gambling problem that incurred debt.
- Why the Debt was Incurred: Sometimes the reason behind the debt is taken into account, such as when debt was gained as part of an affair.
- Where the Property is Going: If the family car goes to one spouse then it is likely that the debt of the car loan will also go with them, in order to keep the property division complete.
How Can I Get Help with My Divorce?
If you are considering a divorce then you’re going to need to speak with a good divorce attorney. Thankfully, we know plenty here at ADAM. Whether you need a hand with the paperwork, have questions about what to expect, or are facing your ex-spouse in the courtroom, we can help. Give us a call at (248) 218-0819 to learn more about how we can help you with your divorce so you can go back to enjoying your life with a minimal amount of stress.