Divorcing spouses in Illinois often put a lot of time and energy into figuring out how they split up their marital estate. This may include practical things like who gets what furniture or household items as well as larger financial assets like retirement accounts or a house. In addition to assigning future ownership of assets, couples must also figure out how to split up any joint debt.
As explained by SoFi, the determination of which person owns a debt may be made in part based on whether or not the debt is in one person’s name only or is in both people’s names. Additionally, individual state laws may dictate when one spouse is no longer financially liable for any debt incurred by their partner.
Money Management International recommends that as soon as a couple decides that they will get divorced, they should either put a hold on or cancel any joint credit accounts. This will help to stop any further debt from being incurred and added to any existing balances. This is important because even if a divorce settlement ends up assigning responsibility for a particular debt to one person, the creditor may still pursue repayment from the other party if the original debt was in both names.
If a joint debt is assigned to one person in a divorce, that person should transfer the debt into a new account in their name only. This is the only way to eliminate any potential liability for the other spouse going forward.