How to Handle Debt and Divorce

 Posted on May 20, 2026 in Divorce

The division of marital property is an essential part of the divorce process, but what some people forget is the division of debts. Whether credit cards, car loans, or student loans, it is important to take a close look at the debts that have accrued as a couple. With the help of a Schaumburg, IL family law attorney, you can work toward a carefully crafted property agreement.

Every state has its own approach to dividing property, money, and debts. In Illinois, these are split according to what is equitable, not necessarily even, and the courts take various factors into account. Anything that is considered marital property can qualify for division. At A. Traub & Associates, we bring over 100 years of combined attorney experience, which allows us to negotiate with confidence in cases like these.

What Is Marital Property in Illinois?

Marital property includes assets and debts accumulated during the marriage. If one spouse bought a car before the marriage, it would likely go to the original buyer. However, if the couple bought the same vehicle during the marriage, that would qualify for equitable division.

These rules also apply to debt. Any liability is subject to fair division, no matter whose name is associated with the debt. An individual credit card used during a marriage may not be considered marital debt if the sole benefit of the purchases went to that individual. However, if that same card is used for family purchases, those would likely be considered marital debts.

How Are Joint Debts Split in an Illinois Divorce?

Even if a loan or credit card is only in your name, it may still be considered marital debt and divided by the court during divorce. If your spouse is ordered to pay a debt but fails to do so, your credit score could still be harmed if your name remains on the account. In some cases, the court may offset this risk by awarding the account holder a larger share of the marital property. Credit scores are affected by factors such as outstanding debt, payment history, the age of accounts, and recent credit activity.

Getting a divorce will not directly affect your credit score, but there are factors related to divorce that could make your score drop. Your ex may not be used to paying bills or could have a hard time coming up with funds. Some accounts might not be able to be refinanced, so you and your ex could still have to work together in order to get payments in on time.

Refinancing a Mortgage After a Schaumburg Divorce

A mortgage can be one of the hardest debts to handle in an Illinois divorce. A divorce judgment may say that one spouse will keep the house and pay the mortgage. However, that does not automatically remove the other spouse from the loan. If both names are still on the mortgage, the lender can usually pursue both spouses if payments are missed.

Refinancing may solve this problem. When one spouse refinances the home, he or she takes out a new loan in his or her own name. This can remove the other spouse from future responsibility for the loan. It can also give the spouse keeping the home a chance to buy out the other spouse’s equity.

Refinancing is not always easy. The spouse who wants to keep the home must usually qualify based on income, credit score, debt load, and the value of the house. Higher interest rates can also make refinancing more expensive. A spouse may want to keep the family home for emotional reasons, especially when children live there. Still, the numbers need to work. A house can become a burden if the mortgage, taxes, repairs, and insurance are too much for one person to carry alone.

Why Do Some Spouses Consider Bankruptcy During Divorce?

Some spouses think about bankruptcy during divorce because the household debt has become too heavy to manage. Credit card balances, medical bills, personal loans, and past-due mortgage payments can place real pressure on both people. Divorce often makes the problem worse because one household becomes two.

Filing for bankruptcy before divorce may help simplify debt issues. If both spouses qualify and file together, they may be able to discharge certain unsecured debts before property and debt division are finalized. This could reduce the number of debts the divorce court has to divide. It may also save money because the spouses may file one bankruptcy case instead of two.

However, filing before divorce can also slow things down. A bankruptcy case may affect property division. The spouses may need to wait for the bankruptcy court to address certain assets or debts. This can make the divorce take longer.

Can a Marital Agreement Protect You From Joint Debt?

A marital agreement can help spouses decide how debts will be handled. This may include a prenuptial agreement signed before marriage or a postnuptial agreement signed during marriage. These agreements can state who will be responsible for certain debts, including credit cards, student loans, business debts, or a mortgage.

A valid marital agreement can give the court clear guidance about what the spouses have already agreed to. Still, a marital agreement is not automatically bulletproof. A spouse may challenge it. Common arguments include lack of fair disclosure, pressure to sign, unfair terms, or unconscionability. Unconscionability means the agreement is so one-sided or unfair that enforcing it would be improper (750 ILCS 10/7). For example, an agreement may be questioned if one spouse hid major debts or assets before it was signed.

A marital agreement also may not control what a creditor can do. If both spouses signed for a joint credit card or loan, the creditor may still seek payment from either person. The agreement may give one spouse the right to seek reimbursement from the other, but it may not stop the creditor from collecting.

Contact a Schaumburg, IL Divorce Lawyer Today

What is considered marital property and marital debt is not always straightforward. Contact our experienced Schaumburg, IL property division attorneys to learn more about how debt could be divided in your case. Call A. Traub & Associates at 630-426-0196 to set up an initial consultation.