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How is Debt Divided During an Indiana Divorce?

During your marriage, you and your spouse began accumulating assets and debts to your shared marital estate. Now that you’re divorcing, these assets and debts need to be distributed to your individual estates. The process for doing this in Indiana is known as equitable distribution. 

In Indiana, there is a presumption that the marital estate should be divided evenly between the two spouses. However, that presumption is rebuttable, meaning it is subject to cancelation. The court could, if so inclined, divide the marital estate unevenly if dividing it in half would leave one spouse in a difficult situation. Ultimately, the courts divide the marital estate in accordance with what is fair as opposed to dividing it equally in all cases like some other states.

Marital Debt Versus Separate Debt

Many people begin their marriages with some form of debt. Student loans, car payments, and credit card bills are among the likely debts that they have incurred prior to getting married. Such debts are considered the property of an individual spouse. Debts incurred during the marriage are considered property of the marital estate. 

In most situations, debts should be divided as equally as possible between the two spouses. However, you can bring forth evidence that splitting debts evenly wouldn’t be “just and reasonable,” and this could convince the court to apportion more of the debt to the other party’s estate. 

In addition, for those who signed prenuptial or postnuptial agreements, the agreement may include instructions on how to divide marital debt or whose estate the debt belongs to. 

For joint debts, those that are considered “just and reasonable” are typically divided as evenly as possible. As an example, let’s say that you and your spouse both have student loans from the beginning of your marriage. You’ve since purchased a house and taken on some credit card debt. Marital debts will likely be combined together and then split between the two spouses’ estates. 

You may want to see the debts divided differently based on what would be fairer given the context of your marriage. Indiana defaults on splitting debts evenly. If you want to pursue a different arrangement, you will need the help of a qualified divorce attorney. 

Factors Considered in Equitable Distribution

When dividing debts and assets in Indiana, courts consider several factors. These include:

  • The length of the marriage – A longer marriage will generally see the marital estate divided more equitably as opposed to evenly. 
  • Economic circumstances – The courts will consider the economic circumstances of both spouses when dividing the marital estate.
  • Contributions to the marriage – Includes both financial and non-financial contributions such as child-rearing and homemaking. 
  • Earning potential – The courts will consider each spouse’s earning capacity.
  • Needs of the spouse – The court will consider each spouse’s financial needs and prospects.
  • Conduct of the parties – The court will consider the conduct of both parties when dividing the marital estate. 
  • Financial condition before the marriage – Each spouse’s financial situation before the marriage. 

Talk to a Danville, Indiana, Divorce Lawyer Today

Chris Arrington represents the interests of divorcing couples in Indiana. Call our office today to schedule an appointment, and we can begin discussing your next steps right away



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