How is debt divided in a divorce in Wisconsin?
In Wisconsin, all debts incurred by either spouse during marriage are generally presumed to be shared marital debt after divorce. Thus, a spouse can be held liable for any debts incurred by the other spouse, regardless of whose name is attached to the debt. A spouse can even be held liable for marital debt they didn't know about.
Who is Responsible for Marital Debt in WI?
The Wisconsin Marital Property Act says that any debt incurred by either spouse in a marriage is presumed to have been made “in the interest of the marriage or the family.” That means that the default for any debt acquired during a marriage is that it is all jointly-shared marital debt during a divorce. As such this debt will be divided during the divorce.
For example, debt from a house or vehicle purchase made by both spouses is clearly a marital debt. But any house purchased during a marriage, even if is financed and titled to only one spouse, is considered a marital debt obligation for which both spouses are liable in a divorce.
Additionally, a spouse in Wisconsin can be held liable for unknown debts. For example, if one spouse incurs a credit card debt without the other's knowledge, the debt is still considered a marital debt. Both spouses are liable for that debt.
Are There Exceptions to shared debt?
There are clear exceptions to the Marital Property Act definition, such as pre-marital debt, debt in support of a spouse or child from another marriage, or a tort committed by one spouse.
Further, a spouse can contest liability for debts that were clearly not incurred “in the interest of the marriage or the family.” It's important to understand, however, that the burden of evidence is on the contesting spouse. This is because all debts incurred during a marriage, by either spouse, are marital debts unless proven otherwise.
What Property can be Used to Satisfy Debts?
In Wisconsin, jointly-held property is used to satisfy marital debt. Additionally, courts can make individually-held property available to satisfy marital debt obligations.
An example of individually-held property (or “separate” property) is where a spouse gained a title to land before they were married. Another example is an individual bank account that holds funds from a gift given by someone outside the marriage.
Even though these properties are individually held, the courts may make them available to satisfy the obligations of marital debt. Because of the way Wisconsin defines marital debt (as a joint obligation), this means that property which a spouse had no hand in acquiring may be used to satisfy debts that they alone incurred. Put another way, your property may be used to pay your spouse's debts.
Start Dividing Property & DebtsGet your WI property division worksheet here. Document property, assets, and debts. Think through how you want to equalize your property division, and avoid a lengthy battle in court.
How Do I Determine My Marital Debt Liability?
In Wisconsin divorce proceedings, there are two codes that affect marital debt: the Marital Property Act and the Family Code. Broadly, the Marital Property Act addresses property affected by marriage and the Family Code addresses the ways property (and debts) are distributed in a divorce.
There are several things that may help with determining your marital debt liability as defined by both codes. First, identify pre-marital debt, debt that was incurred in support of a spouse or child from another marriage, or debt from a tort committed by one spouse. Next, identify debts that were not incurred “in the interest of the marriage or the family.” It can also be helpful to obtain credit reports of both spouses so that all debts are known to both parties.
References: Chapter 766
Property Division Articles & Frequent Questions
Three Simple Steps
Find out how simple the divorce process can be when you work with a law firm that puts you first. Book your consult today!
3. MOVE FORWARD