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What Happens to Debt During a Divorce?

Schwei & Wendt, S.C. May 17, 2019

When most people imagine property division during a divorce, they imagine splitting their incomes and assets. What they don’t always picture is splitting their debts.

While it may seem like anyone who incurred debt should pay it off, it doesn’t always work out that way. For Wisconsin couples, how do their shared and individual debts play into the divorce process?

Community Property

Wisconsin in a community property state, which means that everything a married couple owns is presumed to be marital property and thus qualifies for a 50/50 split. Unfortunately, this also includes debt.

In community property states, it doesn’t matter who had the most money or incurred the most debt. If you are married, you are subject to equal division – or equal responsibility, in the case of debts. However, if the debt precedes the marriage, that debt is considered individual property and stays with the individual who incurred said debt.

Uncontested Divorces Have More Flexibility

While community property does split everything 50/50, divorcing couples are not completely bound to this arrangement. If the divorce is uncontested, both parties can decide on a different distribution plan that meets their needs and divides debts in a way they believe is fair.

Options like collaborative divorce may help couples achieve this goal. Collaborative divorce encourages both parties to work together with their attorneys to find solutions to their problems at their pace. It is often a less time-consuming and less expensive process.