Division of Debts
When we hear about contentious divorces on the news and in the paper, the focus is frequently on the division of the couple’s assets. Spouses may fight over who gets the primary residence, request substantial sums as monthly support, and hide assets from each other in an effort to keep as much as possible for themselves. While these types of stories make gripping headlines, the reality is that most couples do not have many millions of dollars in assets to distribute between themselves, and they are not concerned about who gets which luxury vehicles. However, they often need to grapple with the division of debts acquired in a marriage and how those debts will be paid after a divorce. At Reddin & Singer, LLP, our Milwaukee property division lawyers deal with this reality on a daily basis and can help you in navigating the division of debts.The Division of Debts in Wisconsin
Wisconsin is a community property state, which means that all debts incurred by either spouse during the marriage are presumed to be owned by both spouses, and they must be divided during a divorce. Even if the debt is in one particular spouse’s name, it can be assigned to either party during a divorce because the court will presume that it was incurred for the benefit of both parties.
There are two exceptions to this general rule. First, any debt that a spouse acquired prior to the marriage, unrelated to the marriage, is not a marital debt. This is a personal debt that stays with the spouse who acquired it. The court will not reassign these types of personal debts during the divorce process.
Second, either of the spouses can contest the presumption that a debt acquired during a marriage was for a marital purpose. For example, perhaps a husband took on a great deal of debt while going out to expensive restaurants and staying at luxury hotels while on work trips. Even though the debt arose during the marriage, the wife may be able to argue that it is not a marital debt because it was purely for the benefit of the husband and unrelated to the marriage. Both parties should be aware that this can be a difficult showing. If the debt is even tangentially related to the marriage, the court may find that it is a marital debt. For instance, if the husband argues that those expenses during work travel were necessary to impress clients, he might be able to show that they brought in business, which was ultimately for the benefit of the whole family.Distinguishing Marital from Personal Debt
In order for a court to determine which debts must be divided between the spouses and which debts are personal, it must first do an accounting of the debts held by one or both spouses at the time of the divorce. At the beginning of the divorce process, the court will ask the parties to document each of their debts, including when the debt arose, what the debt was for, and what the current outstanding balance is. If either spouse believes that the other is hiding assets or misrepresenting debts, an accountant or investigator can sometimes be hired to do an independent evaluation of a couple’s finances. Once all of the debts are taken into account, the court will then determine which should be split between the parties and which should be held by one individual.Consult an Experienced Divorce Lawyer in the Milwaukee Area
If you know or have reason to believe that significant debts were accumulated during the course of your marriage, and you believe that many of these debts were for personal rather than marital purposes, you should consult a divorce attorney about how to minimize your liability for these debts during a divorce. Since the court starts from a presumption that all debts accrued during a marriage are both parties’ responsibility, the burden will be on you to prove otherwise. At Reddin & Singer, LLP, our property division attorneys frequently work with spouses to analyze existing debts and make a case to a court for limited liability. We can assist spouses with these and other financial matters, such as spousal maintenance, in Milwaukee, Racine, Ozaukee, West Bend, Mequon, Port Washington, and other areas of Milwaukee, Ozaukee, Racine, Washington, and Waukesha Counties. Contact our office for more information at (414) 271-6400 or online.