How Is Debt Divided in a Gray Divorce?

 Posted on February 10, 2025 in Divorce

A gray divorce can bring a variety of pressing questions, especially regarding finances. One of the most significant concerns divorcing couples over age 50 may have is how to divide debt. Depending on the situation, these debts can include everything from high credit card balances to mortgage obligations accumulated over decades of marriage. At this stage in life, it is critical to secure a fair division of liabilities to protect your financial stability and future. With careful financial planning and the guidance of an Illinois gray divorce lawyer, you can confidently navigate the debt division process.

What Happens to Debt in a Gray Divorce?

Debt acquired during a marriage is typically considered marital debt in Illinois, regardless of whose name is on the account. The state follows the principle of equitable distribution, meaning the division of assets and liabilities is based on what the court deems fair, not necessarily equal. Courts consider factors like the duration of the marriage, each spouse's financial circumstances, and the contributions each person made during the marriage.

Older adults going through a divorce should prepare to provide full transparency of their financial situation, including any joint debts, individual debts, and the sources of income that will remain after the divorce.

How Is Credit Card Debt Divided?

Credit card debt is one of the most common liabilities in a gray divorce. In Illinois, credit card debt accrued during the marriage is generally divided equitably. However, debt accumulated for personal use may remain the sole responsibility of the person who incurred it. To protect your credit score during a divorce, consider implementing the following tips:

• Close joint accounts to prevent further debt accumulation

• Request a credit report for a complete list of outstanding debts

• Negotiate a payment plan to determine a fair division of responsibility for the debt

What Happens to the Mortgage?

Dividing mortgage obligations in a gray divorce can be particularly challenging. Many older adults have substantial home equity or may still be paying off a mortgage. The court may decide to:

• Sell the Home: The proceeds from the sale can be used to pay off the mortgage and be divided among the spouses.

• Assign the Home to One Spouse: The spouse who keeps the home may have to refinance the mortgage to remove the other spouse’s name.

• Continue Co-Ownership: Sometimes, divorcing spouses may agree to retain joint property ownership, specifically if one spouse plans to temporarily continue living there.

How Can Financial Planning Help During a Gray Divorce?

Since many facing gray divorce are nearing or already in retirement, dividing debt and assets is essential to avoid jeopardizing financial security. Illinois courts will consider each spouse's economic situation when determining how to divide marital property and debt. A financial advisor can also help you assess your options, prioritize your needs, and prepare for life post-divorce.

Contact a DuPage County, IL Divorce Attorney for Help with Dividing Debt

If you are overwhelmed with how to divide debt in your gray divorce, a Naperville, IL divorce lawyer can help. Divorce Over 50 - Goostree Law Group will assist you with navigating the debt division process, protecting your credit score, and planning for your financial future. Call 630-634-5050 today to schedule a free consultation and discuss your case.