How Debt Is Divided in Divorce in Wisconsin
In Wisconsin, all debts incurred by either spouse during or before the marriage are generally presumed to be shared marital debt in a 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.” Furthermore, property brought into the marriage is considered marital property. So, any debt from before or during the marriage is subject to be divided between the spouses in the property division stage of 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 that both spouses are liable to 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 a few exceptions to the Marital Property Act definition, such as debt in support of a spouse or child from another marriage or a tort committed by one spouse.
Furthermore, 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 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) could be an inheritance that a spouse received. 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.
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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.
Debt is divided as part of the property division process. In general, parties look at the total debt and divide it based on who will keep assets tied to it. For example, if one party keeps the house, they will likely keep debt associated with it as well. The overall assets minus debts that each party is taking should be equal in the end.
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Frequently Asked Questions
How is debt divided in a divorce in Wisconsin?
Debt is a part of the marital estate, so it can be split between the parties or paid off. However, this does not mean it will be split down the middle. It can be instead split in a way that makes sense. For example, if one party is keeping the marital home, then they could keep the mortgage on the house as well. Or, if one party has significant student debt, they could keep that if they have a higher income to pay them off with.
Who is responsible for credit card debt in divorce in Wisconsin?
Usually, credit card debt is split between the parties or paid off using marital assets. This is especially true if the credit card debt was created as a part of the marriage such as to buy furniture.
A party could be held solely responsible for it if the debt was taken out in a way that was not for the marriage. For example, if one party incurred a lot of debt through gambling, they could be told they have to keep all of it.
Is Wisconsin a community debt state?
Wisconsin is a community property state, so they are also a community debt state. This means the court can split the debt between the parties. The laws assume that spouses communicate with each other about the debt they have and incur throughout the marriage.
How do I protect myself from my husband's debt?
The best way to protect yourself from your spouse’s debt is to get them to agree to keep their debt. If you cannot get them to agree, then you have to convince the court that you shouldn’t be liable for it. If you are planning ahead, you can always assign debt in a prenuptial agreement or postnuptial agreement.
What is financial infidelity in a marriage?
Financial infidelity is a term sometimes used to describe when one spouse hides spending, debt, or credit cards from the other. This is a problem because it can have negative impacts on the party that doesn’t know about them as well.