Debt is one of the most contentious and misunderstood aspects of Wisconsin divorce. People often assume that a divorce decree settles who owes what — but the relationship between divorce law and creditor rights is more complicated than that.
Marital Debt Is Divided Equally
Wisconsin is a marital property state. Debt incurred during the marriage — credit cards, car loans, medical bills, personal loans — is presumed to be marital debt and is subject to equal division in divorce, just like assets. The court has discretion to deviate from equal division based on the specific facts, but equal division is the starting point.
The Critical Limitation: Creditors Are Not Bound by the Divorce Decree
This is the part most people don’t understand until it’s too late. If a credit card is in both spouses’ names and the divorce decree assigns it to one spouse, the creditor is not a party to that decree and is not bound by it. If the spouse assigned the debt stops paying, the creditor can pursue both spouses for collection — and report the delinquency on both credit reports.
The other spouse’s remedy is to go back to family court and pursue the non-paying spouse for contempt or a judgment — while the credit damage is already done.
How to Protect Yourself
Joint accounts should be paid off and closed as part of the divorce if possible. If one spouse is keeping a joint debt, the agreement should require refinancing into that spouse’s name alone within a specified time period, with consequences for failure to do so. Your attorney should address every joint liability in the divorce agreement — not just the assets.
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Attorney Christopher Carson handles divorce and property division cases in Waukesha and Milwaukee counties. Call (262) 860-8932.
About the author. Christopher S. Carson, J.D., M.A., has practiced law in Milwaukee for 34 years. He holds an M.A. in International Security Studies from Georgetown University, where he was the Bradley Fellow, was formerly with the American Enterprise Institute, and is a contributing editor at the New English Review. Read the full biography.
More on this: Family law practice at Carson Law Office · Schedule a free consultation · (262) 860-8932
Related reading: Legal Custody vs. Physical Placement in Wisconsin: What Divorcing Parents Get Wrong · How to Modify a Child Custody Order in Wisconsin · How Divorce Affects Your Home in Wisconsin
This article is general information about Wisconsin law, not legal advice about your situation, and reading it does not create an attorney-client relationship.