How Is Debt Divided in Divorce in Indiana?

By Beverly Bird
Man removing a wedding ring.

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When it comes to dividing marital property and debts, states fall into one of two categories. They either do it according to the principle of equitable distribution or as community property. Equitable distribution means the marital estate is divided between spouses in a way that seems fair to the court. In community property states, the division is 50-50. Although Indiana is an equitable distribution state, the court will divide debts 50-50 -- unless you can make a good case why it shouldn’t happen that way. Convincing a judge to order an uneven split might require the help of a lawyer.

The Presumption for 50-50 Distribution

Marital property -- sometimes called your marital estate -- includes not just assets but any debts you accumulated in acquiring them. Even if you used a credit card for nothing but gas and groceries, its balance is linked to something you purchased to benefit yourselves and, by extension, your marriage. Indiana courts consider them together, putting them all in one pot, and begin with the premise that you should be responsible for half and your spouse should be assigned responsibility for the other half. The state’s code instructs judges to presume that an equal division of the marital estate is “just and reasonable.”

Deviations From an Equal Division

Because Indiana is technically an equitable distribution state, you can argue to the court or rebut the presumption that a 50-50 division is fair. If your spouse is a compulsive shopaholic and runs up significant credit card debt and you can get the account statements to show that all the purchases were made at her favorite clothing store, this is a good argument that she should be held accountable for this entire debt. But, if she works at a minimum wage job and you earn six figures and the credit card balances are the result of purchases that benefitted the whole family, she might argue that it would not be just and reasonable to saddle her with responsibility for half of all the marital debt. This might leave her without enough money to pay for her necessary living expenses. Indiana courts might begin with a 50-50 presumption, but judges can deviate from this due to circumstances that are unique to your marriage.

Separate Debt Isn’t Always Separate

In most states, debts you incurred and assets you acquired before you got married are your separate property and sole responsibility when you divorce. But Indiana is somewhat unique -- its statutes provide that property brought into the marriage goes into the marital pot for distribution. If your spouse bought a new car on credit before you got married, the court will probably consider this to be a marital debt and divide it 50-50 unless you can present a good argument against it. This doesn’t necessarily mean that you would have to pay half of each of her car payments post-divorce. The total debts you take on and total debts she takes responsibility for would be equal.

Effect of Marital Misconduct

The Indiana code allows judges to consider marital misconduct when dividing the marital estate. This isn’t punitive. For example, the judge won’t order your spouse to pay more in the way of marital debt as punishment if she committed adultery. But if she incurred a lot of debt in the course of pursuing an affair, the judge can assign responsibility for this portion solely to her.

About the Author

Beverly Bird has been writing professionally since 1983. She is the author of several novels including the bestselling "Comes the Rain" and "With Every Breath." Bird also has extensive experience as a paralegal, primarily in the areas of divorce and family law, bankruptcy and estate law. She covers many legal topics in her articles.

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