When a couple decides on divorce, each party may have financial concerns, especially if significant debt is involved. Debt division can be particularly stressful for spouses who are married to partners with poor money habits.
Understanding how debt is divided in a Wisconsin divorce can help empower worried spouses to advocate for their financial wellness.
Debt division in Wisconsin
As a community property state, Wisconsin follows a 50/50 split when it comes to marital debts and assets. However, divorcing spouses should not fret because not all debts are treated the same. During property division, family court will consider the following before dividing debts:
- When the debt was accumulated
- The purpose of the debt
- Whether the debt directly benefited the marriage
These considerations can help to differentiate between marital and individual debts. This is to avoid burdening one spouse with debts they were not responsible for or didn’t benefit from. Therefore, spouses who are worried about the implications of their partner’s poor money habits may be able to avoid undue financial responsibilities. During divorce, spouses take full responsibility for debts for:
- Personal expenses
- Credit cards
- Loans that benefited them alone
Debt division is detailed in order to help shield spouses from debt they didn’t personally incur.
How a spouse can protect themself from their spouse’s debt
Understanding the difference between marital and individual debt is key to avoiding undue financial responsibility. Debt that either spouse incurred during the marriage is often considered marital, regardless of who accumulated it. Conversely, individual debt is incurred:
- Before the marriage
- For non-marital expenses
- For personal gain
Spouses can identify these two categories of debt during divorce by gathering and analyzing all pertinent financial records. Some documents that can help spouses avoid debt they’re not responsible for include:
- Loan agreements
- Credit card statements
- Bank records
Evidence that a debt was solely for one spouse’s personal benefit can help the other spouse argue that it should not be considered marital debt.
Divorcing spouses may worry that Wisconsin’s 50/50 debt split might burden them with undue financial responsibility. However, they may be able to steer clear of debt they didn’t incur by seeking legal guidance and maintaining thorough documentation of pertinent financial records.