There are many financial considerations that need to factor into a divorce agreement—especially if marital debt is involved. If you and your spouse have shared debt, you may wonder who is responsible for paying it after your divorce is complete. This decision will depend on a number of factors.
Indiana’s Equitable Division Laws
Each state is responsible for determining how to handle divorce proceedings. Some states follow a community property model, where the court will split each asset and debt evenly between the divorcing parties. Others follow an equitable division system, where the court will determine debt and asset division based on what is fair under the circumstances of the case.
Indiana is an equitable division state. When determining how to divide your marital property, the court will take several considerations into account.
- The earning capacity of each spouse
- How much each spouse contributed to the asset or debt
- Whether either spouse was wasteful or disposed of property during the marriage
- The financial circumstances of each spouse at the time of the divorce
- How the couple obtained the property, such as inheritance or purchase
How Indiana Courts Divide Marital Debt
As part of your divorce judgment, the court will determine who is responsible for paying certain bills following the split. In equitable division states, courts typically assert that both spouses are equally responsible for debt incurred during the marriage. The debt you or your spouse accrue during this period is known as marital debt.
You and your spouse may also have separate debt that you incur prior to the marriage, such as student loans and credit card debt. Indiana courts maintain that this separate debt is still subject to division during divorce, regardless of who actually owns the debt.
If you and your spouse go to trial for your divorce, the court will consider several factors when determining how to divide your debt.
- You and your spouse’s financial situations
- Which properties you and your spouse will keep following the divorce
- Which spouse benefitted the most from the debt
Although Indiana’s laws surrounding marital and separate debt differ from other equitable division states, the court will still consider whose name the debt is in. If your spouse’s credit card debt is in his or her name only or if your spouse incurred high student loan debt before you married him or her, it is unlikely that you will need to pay for those bills.
Mediation versus Trial for Marital Debt Division
Asking a court to divide your marital debt can be risky, but you can avoid this uncertainty by entering into mediation. During mediation, you and your attorney will negotiate these terms with your former spouse and execute a mutual divorce agreement.
While these processes are not always successful, mediation allows you to exert more control over your divorce and the payments you will need to make in the future. However, if you cannot reach an agreement or you feel uncomfortable meeting with your spouse, going to court will likely be in your best interest.
To protect yourself during this process, contact an Indiana divorce lawyer as soon as possible. Your attorney can represent you in negotiations as well as the courtroom, advising you on the specific terms of any proposed agreement and advocating for your best interests during each stage of the case.