If you, your spouse or both of you have debt, Michigan property division laws will dictate who is responsible for it during divorce proceedings. While a judge has some degree of discretion in dividing property and debt, state law sets parameters and guidelines based on what it considers to be fair.
As Michigan Legal Help explains, when deciding what is fair, a court will consider which assets and debts are marital property and which are individual property. And it will consider other relevant factors such as needs, earning potential, the reason for the divorce and other matters it deems relevant.
Marital property and debt
Like most states, Michigan considers nearly all property and debt you or your spouse acquire after the date of marriage to be marital property or marital debt, and therefore, belonging to you equally. Even if you purchase a jet ski or a designer handbag or something exclusively for yourself with money you earned, the law will typically still consider that to be marital property if you purchased it during the marriage. Similarly, if your spouse ran up a credit card in his or her own name, that debt may belong to you equally.
Individual property and debt
Not all property and debt belongs to both of you, however. Items you owned or debt you acquired before marrying your partner will still belong to you throughout the marriage as long as you keep it reasonably separate, as will individual inheritances. For example, if you owned land coming into the marriage, that land and any increased value will belong to you during and after marriage as long as no complicating factors arise, such as joint improvements or a combination of assets.
Similarly, if your spouse took out a personal loan before you married, that debt would be his or her personal responsibility as long as you do not claim responsibility for it or mix it with your own finances. For example, if you consolidate it with your debt, put your name on it or simply begin paying it for your partner, this could compromise your ability to deny responsibility.
If you feel concerned about your spouse’s debt, know that you may still have recourse. When dividing property and debt, a court will consider what it deems to be fair. Not all divorcing couples walk away with half of their assets and debts. A judge may consider who has the greatest financial need, who has the greatest earning potential or whether one partner was responsible for the marriage ending.
Some spouses may argue that because their partner ran up debt without their knowledge that they should not be responsible for it. The options available to you will depend on the unique factors of your case.