Indiana is considered an equitable distribution state when it comes to dividing marital assets and debts during a divorce. While in most cases, the courts will seek to divide the marital estate 50/50 (including debts), the court doesn’t necessarily have to split assets evenly. In some cases, the courts will favor one party, assigning more of the marital estate to them and fewer of the marital debts. 

Debt is divided just like assets during a divorce. First, a determination must be made as to whether or not the debt is the property of one spouse or the marital estate. 

Debts accrued before the marriage began

The marital estate is created on the date of your marriage. After that date, the marital estate begins acquiring assets and debts. Any property, assets, income, or debts acquired during the marriage are considered property of the marital estate. It is precisely the marital estate that must be divided during a divorce. No one gets “half your stuff.” Instead, they get half of what was acquired during the marriage. 

This applies to debts as well. Any debt brought into the marriage is considered the property of that individual spouse. Any debts acquired during the marriage are considered property of the marital estate. 

Debts accrued during the marriage

Debts acquired during the marriage are considered property of the marital estate. That means that they must be divided and assigned to each spouse’s estate once the marriage is terminated. During your divorce proceedings, you can opt to divide the joint debts in any manner you please. However, if you cannot reach an agreement with your spouse, the courts will make that decision for you. 

Joint debts are usually divided as evenly as possible between the two parties. This does not, however, mean that they are always divided evenly. The courts will consider several factors when dividing the marital estate, including debts. This includes the relative economic conditions of both parties. The court aims for an arrangement that is fair to both parties, not necessarily equal. Nonetheless, the Indiana courts default on the presumption that marital debts should be divided evenly. 

Prenuptial agreements

With a prenuptial agreement, you can assign debts acquired during the marriage to one or the other spouse. For example, let’s say one spouse has a credit card that they use to make various purchases. Without a prenuptial agreement, the debt would likely be the liability of the marital estate and subject to equitable distribution. However, with a prenup, you can assign specific credit cards and personal loans as the liability of one spouse, thus protecting the other spouse from the debt. Ultimately, a prenuptial agreement can avoid a lot of the problems that occur when courts are forced to decide what debt belongs to who.

Talk to a Danville, Indiana, Family Law Attorney Today

Chris Arrington represents the interests of Indiana residents who are pursuing a divorce. Call our office today to schedule an appointment, and we can begin discussing important aspects of your divorce, such as equitable distribution of assets and debts, alimony, child custody, and child support.