Student loans are among the largest debts that many Americans have and can be difficult to get rid of. Even bankruptcy is unlikely to discharge your student loans. When you are married, your spouse can help you keep up with your bills or even cosign on your student loan agreement. However, what happens to your student loan debts during your divorce? In Illinois, divorcing spouses equitably divide their marital debts. There are five important questions that determine whether student loan debts qualify as marital debts and how they will be divided during your divorce:

1. When Were the Student Loan Debts Created?: The primary difference between marital and nonmarital debts is whether you entered the debt while you were married. If you took out a student loan while you were married, you will likely classify it as a marital debt. If your student loans originated before your marriage, they are likely a nonmarital debt that you are solely responsible for. 
2. Whose Name Is on the Contract?: From the creditor’s perspective, the people responsible for your student loans are the ones whose names are on the student loan agreement. The creditor may require your spouse to cosign on the agreement if you take out a student loan or refinance a premarital student loan agreement while married. If your spouse’s name is not on the agreement, you can negotiate for them to help repay your student loans as part of your divorce, but the creditor will hold you responsible if your spouse does not follow through.
3. What Does Your Prenup Say?: A prenuptial or postnuptial agreement can decide how you will divide debts during divorce, including your student loans. If you have a prenuptial agreement, it may state that you will be solely responsible for your own student loan debts or that your spouse will help pay your nonmarital student loans.
4. Do You Both Have Student Loans?: An equitable division of debt means it must be fair given the circumstances and not necessarily equal. If you both incurred student loan debts of similar value during your marriage, you can agree to each be responsible for your own student loans.
5. How Was the Money Used?: It may also be equitable for a spouse to be responsible for their own student loans if all of the money went towards paying for their education and benefiting their career. However, spouses sometimes use student loan money to pay for marital expenses, which may mean it is fair for both spouses to share the debt.

Contact a Kane County Divorce Attorney

Your marital debts are part of a larger financial picture in your divorce, including how you will divide your marital properties. A St. Charles, Illinois, divorce lawyer at Goostree Law Group can help you create a strategy for financial success in your divorce. Schedule a free consultation by calling 630-584-4800.

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Many divorcing couples conclude that selling their house is the best way to handle their marital home. It is difficult to equitably divide their marital properties when one spouse keeps the house, and the cost of owning the home may be too great for one person on their own. By selling the home instead, they can divide the money they receive in the sale and use it towards expenses, such as buying or renting a new home. If you have sold your home before, you understand that it takes a great effort to prepare your home for sale and find a buyer. Unfortunately, your divorce is taking up much of the energy that you might normally devote to the sale. There are several actions that you can take to help with the sale process:

1. Keep the House Occupied: It is natural for one of you to move out of the house once the divorce process has started. The other spouse should continue living in the house until the sale is finalized, even if they would prefer to move into their new home before then. It is more difficult to sell a house that is empty of people or possessions. Paying to stage furniture and appliances in the house is an extra expense and still less attractive to buyers than you living in the house.
2. Fill in Empty Spaces: When one spouse removes their possessions from the house, it can leave unattractive empty spaces in rooms. You should spread out your remaining possessions to fill in those spaces and give the house a more balanced look.
3. Invest in Maintenance: You do not want home maintenance issues to decrease the sale value of your house. You need to assess your home for necessary repairs and try to fix the issues before you put the house on the market. Because you will both be profiting from the sale, it is reasonable to share the maintenance costs with your spouse.
4. Find a Divorce-Experienced Seller: When selling your home and divorcing at the same time, you need a real estate agent to manage the sale while also understanding how the divorce changes the process. Divorcing couples are different than other co-owners because they are under additional stress and often not communicating with each other. The agent may need to take on more responsibility in the sale process and make sure both spouses feel like their needs are being met.

Contact a St. Charles Divorce Attorney

Your house may be the most valuable and complicated property you will have to include in your divorce agreement. A Kane County divorce lawyer at Goostree Law Group has experience with all manner of house-related issues in a divorce. To schedule a free consultation, call 630-584-4800.

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Most properties that you obtain during your marriage are classified as marital properties in the event of a divorce, such as items you have purchased and the income you have earned. Gifts and inheritances are the exceptions to this rule. Inheritances are assets given to you through an estate planning document, such as a trust or will, or after the probate process. Even if you inherit an asset while you are married, it is usually a nonmarital property as long as you can prove that the person who gave it to you intended for you to be the sole owner of the property. However, your decision on what to do with a property after you inherit it can make it marital property.

Commingling and Transmuting

An inherited property can become marital property if you commingle it with other marital properties or involve your spouse in its ownership or management. For instance:

• Inherited money becomes marital property if you put it into a joint account with other marital money; or
• Inherited real estate becomes marital property if you refinance the property and your spouse cosigns on the agreement.

In these situations, your inherited properties are either transmuted into marital properties through your actions or become indistinguishable from your martial properties because they are commingled. As marital property, your inheritance could be divided between you and your divorcing spouse or given to you in exchange for other marital properties. As nonmarital property, your inheritance would not count towards the equitable division of property.

Doctors as a profession are statistically less likely to be involved in a divorce. They have demanding workloads that can strain a marriage, but a successful doctor is often financially stable, which helps a marriage. When a doctor does divorce, their practice is part of the division of marital properties. Valuing a professional practice is different than other businesses and requires financial professionals who are familiar with these practices.

Practice as Property

Your medical practice is marital property if you started it after your marriage. If your practice predates your marriage, you must include its increase in value since your marriage as part of your marital property. Unlike with other types of businesses, your spouse does not have the option of owning part of your practice unless they are also a doctor in the same practice. This static ownership means that you will need to compensate your spouse with other marital properties. Your student debt from medical school is marital debt if it was accrued during your marriage. You may be able to offer to assume sole responsibility for the debt as compensation for your medical practice.

Valuing a Practice

A medical practice shares many of the factors used in determining the value of other businesses, such as revenues, physical assets, and growth potential. Two factors of particular concern when valuing a medical practice are:

Items that you received as gifts during your marriage are usually considered to be non-marital property. A gift that your spouse gave to you for your birthday or anniversary is non-marital, even though your spouse used marital money to purchase it. However, a divorce court may classify a gift as marital property and subject to division, depending on the intent behind the gift and how you used it. Here are four examples of how a gift can become marital property:

1. Gift for Both: The court will distinguish between gifts that are meant for you only and gifts meant for you and your spouse. Wedding presents are a common example of gifts that are marital property because the giver intended you to use it as a married couple. Your spouse may argue that other gifts were given to you as a couple. You need to explain the reason for the gift and whether your spouse used it.
2. Gift as a Loan: A gift by definition is an asset that someone donates to you with no expectation of compensation. Money that a family member gives you becomes a loan instead of a gift if you agree to pay that money back. Loans that you receive during your marriage are marital debts, which can be divided during a divorce. The best ways to prove that a gift was a loan are showing a promissory note or asking the person who gave the money what his or her intentions were.
3. Gift as a Reward: An asset is not a gift if you received it in exchange for another asset or your services. The circumstances around receiving the asset can determine whether it was a gift or a reward. A court may interpret a monetary gift as compensation if the giver was thanking you for your help or expected you to perform a service soon after.
4. Gift Treated as Marital Property: Even a gift that is meant for you alone can become a marital property depending on what you do with it. For instance, money that you inherit is a non-marital property as long as you keep it separate from your marital money. If you put the money in a shared bank account, it gets mixed in with your marital money and may no longer be an individual asset.

Contact a St. Charles Divorce Attorney

You bear the burden of proof when you claim that an item from your marriage was a gift and is not marital property. A Kane County divorce lawyer at Goostree Law Group can find evidence that the item was intended as a gift to you. To schedule a free consultation, call 630-584-4800.

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