Divorce and Unsecured Debt ResponsibilityUnderstanding the issues of unsecured debt responsibility after divorce is important, because what you don't know can come back to haunt you. The following discussion from the financial analyst highlights what needs to be considered. Rayne's Question: I'm going through a divorce. My husband and I have 2 loans together; one was to cover a credit card 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? Timothy's Answer: When couples have debt of any kind, particularly when the debt is jointly held (in both of your names), it becomes very important you and your soon to be ex-husband have a clear agreement as to who is responsible for paying the debt. I would define a clear agreement as being written. If you are using an attorney, he or she will put language in your separation agreement or divorce decree detailing this. This agreement should include account numbers, payment terms as well as instructions as to what will happen if the payments are not made. If you and your husband took out loans(s) to pay off high interest credit card debt and the items purchased were for his personal use or benefit, then he should be responsible enough to pay his debt. The fact you are divorcing does not relinquish his responsibility from having to pay this, but the fact the loan is also in your name does not relinquish your responsibility either. While you did not mention the type of loans the two of you have, generally speaking you cannot remove one party from a debt obligation unless the debt is re-structured in some way, such as with a home equity loan. The fact your husband has sub par credit should be enough reason alone for him to want to begin the slow process of rebuilding and improving his credit. The first way to do this is to make every payment on time. You both have a common interest in making sure your credit is positively maintained and it is in neither of your best interests to do anything to damage it. If either party does not meet your debt obligations, you suffer equally and the effects can last a lifetime. If you feel your husband cannot or will not be a responsible adult and pay his debt obligations, I would suggest you seek outside help to draft an agreement outlining each others responsibilities. If you are not working with an attorney already, another option is to use mediation. In mediation, both parties meet voluntarily to discuss the issues which brought you there. If you and your husband reach an agreement, the mediators can help you put that agreement into writing. Any agreement reached carries the same weight as if ordered by the court. One benefit of mediation is any agreement reached is your own and not dictated to you by someone else to you. People tend to honor agreements they make themselves. - Timothy
Related Articles: Timothy McNamara is a certified divorce financial analyst, specializing in the financial issues that couples and individuals face when their marriage ends. Having gone through a divorce himself, he is passionate about helping people understand and manage the complicated financial issues divorcing couples often face. This column is not intended to take the place of professional advice, but rather to provide financial information about the various issues that arise in a divorce. For specific recommendations concerning your situation, you should retain an experienced certified divorce financial analyst who can answer your questions based on the details of your case. WomansDivorce.com, Timothy McNamara, and Tracey Manzi disclaim any liability from any claim arising from any information contained in this column. This column is not a substitute for professional advice. Divorce
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