Handling Debts In DivorceAddressing your debts in divorce agreements is very important, because they can come back to haunt you after your divorce is over. This I know from experience. Below are some common questions about who is responsible for the debts, how they should be divided, and what can happen if your ex doesn't pay.
How can I protect myself if he agrees to pay the loan in the divorce? Christina's Question: My husband and I have a lien on our house that is few years old because we can not afford to pay it. We are getting a divorce and he wants to take the house and the responsibility for the lien. I am worried that after we divorce, if he does not pay it or file bankruptcy, will they come after me? Brette's Answer: Yes, definitely. That's why you need to make sure there is an indemnification clause in the divorce decree. You need to talk with an attorney. Am I liable for anything if I walk away and leave it all to him? Joy's Question: I am choosing to abandon my spouse (both children are over 18) and leave the state. I have debt (equity line) with him I was pressured into signing for a summer residence to be built (the residence is in his name). I want no part of any assets we acquired together and will not seek a divorce, he will have to get it by default. Will I be liable for anything? Brette's Answer: I highly recommend you not just walk away from the situation. If you default on the divorce the court can order you to be responsible for the marital debt. You will also likely lose your interest in the value of the summer home (it is marital property even if it is just in one name). See an attorney and do not just walk away. » Return to top Am I responsible for his debts if the divorce was never finalized? Jonnie's Question: I have been separated from husband for about 5 years, and now he is saying he is very ill. I served divorce papers, but couldn't afford to pay a lawyer so it was not filed. Am I still responsible for his debts? Brette's Answer: If your divorce was never finalized, then you're still legally married, and in the eyes of creditors, jointly responsible for debts. You should consider seeing an attorney and getting the divorce finished, with a property division that would leave him responsible for his own bills from the date of separation. » Return to top Topic: Building Debt Before Divorce Georgette's Question: My Husband and I are getting a divorce due to marriage infidelity. We currently own a property together. He wants to get a $50,000 equity line of credit right away for a business venture. Will this hurt me in the long run? Brette's Answer: You should make sure he holds off on that until the divorce is final, or at least until papers are filed. A loan on a joint property definitely impacts your divorce property settlement or judgment. Talk to an attorney as soon as you can. Topic: Dividing Debts in Divorce Linda's Question: My husband has unpaid medical bills. Will I be responsible for half of that debt, or have half of it subtracted from my half of the assets in my divorce settlement? Brette's Answer: If the debt occurred before the date of your physical separation, it will likely be considered a marital debt and be considered as part of the asset and debt distribution. The way that your assets and debts are split are determined according to your circumstances. In an equitable distribution state, the court looks at the entire financial picture and makes a decision based on each party's income and situation. In a community property state, assets and debts are split 50/50. » Return to top Can he make me pay for debts that happened after we separated? Hedwig's Question: I'm Dutch and married to a US citizen. After one year, I decided to go back to the Netherlands because of domestic violence. I'm trying to get an annulment, or if it isn't granted, I want a divorce. After I left, my spouse has been getting himself into a lot of debt with credit card companies and other people. Can he make me pay for his financial debt he got himself in after we separated? Brette's Answer: Debts and assets are normally divided as of their value (and existence) as of the date of separation. Dividing debt when one spouse earns more Tracie's Question: He brings in three times the income I do. Am I still responsible for half of all debt, even though he can pay it easier? Brette's Answer: This depends on what state you live in, as well as what the other financial factors are that are involved. Schedule a consultation with an attorney. Are student loans marital debt if incurred during the marriage? Cynthia's Question: My husband & I have been married for 20 years. I am a full-time college student and have one year left until I finish my bachelor's degree. He says we should divorce so he won't get stuck with paying my college loans. Have you heard of anything like this before? Brette's Answer: Your student loans are marital debt. If you divorce, it still is in the pot of debt that must be divided between the two of you. » Return to top Dividing debt when each spouse has their own credit card Barb's Question: How are credit cards handled when each spouse has their own individual credit card account? Brette's Answer: It doesn't matter whose name is on the card. Debt incurred during marriage is marital debt and must be divided. How it is divided depends on your state law. You should consult an attorney. Am I liable if I didn't know about his debts? Jenny's Question: If I didn't know about his credit card debt before I filed, am I responsible for that debt? Brette's Answer: In the eyes of the creditors, you are technically responsible for debt incurred while you are still married. The court will divide your marital debt in a way that is fair and takes into account the situation. Topic: Responsibility for Premarital Debts in Divorce Sherri's Question: Prior to our marriage, my husband purchased our home and even took out a second mortgage. The mortgages and deed are in his name only. Can I be held responsible for either of the mortgages or his credit card bills that he had prior to the marriage and even afterwards? I had no knowledge of his debt or even the extent of it until recently. Creditors are calling and he gets summons because of the delinquent bills! Brette's Answer: If the mortgage was entered into before the marriage, it is a separate debt. Any debt he has incurred during the marriage is marital debt unless you knew nothing about it and did not enjoy any of the benefits of it (using something he bought). You need to get an attorney who can help you separate your assets and protect yourself from his creditors. » Return to top Topic: Assuming Debts For Property That is Kept Rayne's Question: My husband and I have 2 loans together; one was to cover a credit card that he maxed out and stopped paying for. He wants to keep everything that was purchased on that card. I don't have a problem with this, BUT I want him to be responsible for the loan payments. However, his credit is not good enough for him to refinance it in his name alone. What are my options? The other loan was supposed to be for house repairs and summer camp for our son; we split the money equally to accomplish this. Well, he blew his ½ of it and spent most of mine. I ended up only paying for summer camp with the money. I feel as though he should also assume the responsibility for this loan since he received the most benefit from it. Is it feasible to expect a judge to award me this relief? Brette's Answer: Decisions about dividing financial obligations are made as part of the big picture of your property distribution, so it's difficult to say what a judge would or would not without knowing all of the details of your entire situation. Your incomes and spousal support orders are other considerations as well. You make a good argument for why your spouse should be responsible for these loans, so I would encourage you to discuss this with your attorney in detail so that he or she can present a complete argument to the court. If your spouse is ordered to be solely responsible for a particular debt, but cannot re-finance, some of the assets he would otherwise be entitled to could be sold to pay for it. » Return to top Can creditors hold me responsible for debts he was supposed to pay? Kandace's Question: My divorce decree states that my ex-husband is responsible for a debt we encountered. However, the creditors are taking me to court saying I owe half. Doesn't the divorce decree have precedence? Brette's Answer: Unfortunately the divorce court has no jurisdiction over the lenders. This is why it is important to get debts transferred or refinanced into one name. The only option you have is to take him back to court for violating the divorce decree. » Return to top Will I be responsible if he declare bankruptcy later? Rachel's Question: My husband and I are planning to divorce. We have agreed on which financial obligations we will each be responsible for. We will have a legal agreement on who pays what. To protect myself for the future, I want to know if he defaults on a payment or declares bankruptcy, will this affect me if we have clearly separated all of our financials? Brette's Answer: It depends how exactly he takes over the debts. If your name is completely removed from everything, you're not liable. If, however, the court simply says he has responsibility for the debts and your name remains on the account, yes, the creditors could come after you. The best way to protect yourself is to make sure that debt is refinanced into single debt with his name only. Can the car company get a judgment against me if he doesn't pay? Judy's Question: My ex was ordered to pay for the car we got when we were married. The divorce judgment said he shall keep the vehicle subject to any indebtedness, which he shall assume in its entirety and hold the plaintiff harmless, and shall sign any and all documents necessary to transfer said vehicle into his name. The car loan is in my name. Can the car company get a judgment against me because he refuses to pay? Brette's Answer: An indemnity clause is binding only between the parties to the agreement and not the creditors. If the car loan is in your name and he doesn't pay, you're on the hook. Your recourse is to go back to court to get him to recompense you for the amount owed and any fees you had to pay. How do I handle debt collectors who call at work? Nilda's Question: I went through a divorce last year and hired a lawyer who charged me $250 an hour. I gave him $1500 in advanced, and I owe him another $3000. Now the legal department has been calling me at work. I told them that I have no money now and stop calling me at work. The guy was really rude and told me that he won't stop calling me at work and he doesn't care if I lose my job or not. I just want to know if they have the right to do that. Brette's Answer: Under the Fair Debt Collection Practices Act, they cannot call you at work to collect on a debt if you tell them not to. I suggest you Google this law and read all the protections it offers you. Good luck. Can I get his bad debt off my credit report? Gwen's Question: The divorce settle makes my ex responsible for a student loan. He is inconsistent in paying and it is hurting my credit. Do I send the divorce papers to the credit bureau? Brette's Answer: There's no way to get it off your credit report, but you can submit a 100 word statement to the credit reporting agencies explaining this. On the legal side, the only solution is for you to go to court each time he is late and seek to be indemnified for the loss. This is why it is just not a good idea to agree to a situation where you ex is responsible for paying a debt that has your name on it. You could ask the court to order him to refinance it into a home equity or personal line of credit to get it out of your name. » Return to top Is debt assignment in divorce something that can be enforced? Lucille's Question: Our divorce was finalized five years ago and the judge ordered that my ex was to refinance. At the time, I signed a quit claim deed to take my name off of the property. However, he has never tried to refinance it and it is on my credit reports as my debt. He also filed for bankruptcy and then the debt transferred over to my name completely. Do I still own this property? What are my legal rights for getting myself off of the loan and can I make him refinance? Brette's Answer: You need to go back to court on a violation of the order. Since you signed a quit claim deed, you technically are not a legal owner anymore, even though the debt is in your name. You need the court to rectify this situation for you. You could ask for financial indemnification, or you could ask to have the property transferred back to you. Since he filed for bankruptcy, the debt isn't legally his anymore and he can't refinance it. You are going to need to go back to court to get this straightened out. Is interest included if he is ordered to pay off the credit card? Becky's Question: In my divorce, my ex was ordered to pay the balance remaining on a credit card at $200 a month until paid in full. He has to pay me since the card is in my name, and I send him a receipt to him showing that I paid the $200. His current wife says that they do not have to pay interest on the card because it stated an amount in the divorce that was owed on the card and that was all they were going to pay. Yes it did state an amount owed on the card in the divorce, but it also stated until paid in full. How should I approach this? Brette's Answer: As long as there is a balance on the card, he has to pay. Even if he pays off the principal, there will be a balance on the card from interest. He's got to keep paying until it's paid off. I wouldn't even get into a discussion with him (or her) about this. Maybe send a copy of the pay stub on the card statement which shows the balance remaining. As long as there is a balance remaining, he has to pay it. If he won't, then you need to go back to court because he is violating your order. » Return to top Is he in contempt if he didn't pay and declared bankruptcy? Sheila's Question: My ex-husband agreed in our divorce to make payments on a credit card in my name that he used while we were married. He has not made a payment in 3 months. He has declared bankruptcy. Is he in contempt? Brette's Answer: Property settlements are not dischargeable in bankruptcy, so you can still seek redress from him for these payments.
Related Articles: Brette Sember is a former family and matrimonial attorney and mediator, nationally recognized expert, and author of many books including The Divorce Organizer & Planner, No-Fight Divorce, and How To Parent With Your Ex. This column provides general information about the various aspects of divorce. It is not intended to take the place of legal counsel and should not be considered personal legal advice. For specific recommendations concerning your situation, please retain experienced legal counsel. WomansDivorce.com and Brette Sember disclaim any liability from any claim arising from any information contained in this column. This column is not a substitute for legal advice. Divorce Process / Children and Divorce/ Emotions and Divorce Divorce Home / Divorce Guide / State Resources / Divorce FAQS
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