For divorcing couples, sometimes dividing assets is easier than dividing
debts. And the interesting part of it is – in many divorces debt
is what led to the breakdown of the marriage. If you are getting a
divorce and you and your spouse have a fair amount of debt, you may be wondering,
“Are debts or creditors controlled by divorce agreements?”
Unfortunately, the answer to that question is, “Not exactly”
or “No, not really.” Even though marital debt must be addressed
in the divorce agreement, it does not mean that creditors are bound to
what’s in a divorce agreement. Read on as we explain this further.
“Tips for Negotiating a Divorce Settlement”
Joint Debts Are the Concern
Say a divorcing couple has approximately $30,000 in joint credit card debt,
plus they have two joint auto loans with both of their names on it. The
husband agrees to pay all of the credit card debt and the wife agrees
to pay off the balances on the two small auto loans, which total about
One day, about six months after the divorce is final, the husband loses
his job and stops paying on the three joint credit cards. Meanwhile, his
former wife is paying off the auto loans as agreed in their
divorce settlement. Since the wife’s name was never removed from the credit card accounts,
his late payments start to affect her credit score as well.
“But, isn’t the husband liable for the debt? After all, that’s
what he agreed to in the divorce agreement.” It doesn’t matter
what the divorce agreement says. As long as the wife’s name is on
the credit card accounts, she’s equally liable for the “joint
credit card debt” and the creditors can legally go after her for payment.
Being Proactive During Divorce
To avoid the above situation, we recommend either closing all joint accounts
or removing a spouse’s name immediately. If your spouse agrees to
pay a specific credit card or loan and both your names are on it, place
it on inactive status or close the account and make sure that statements
are mailed to you each month so you can keep tabs on the account.
If your ex fails to pay an account that still has your name on it for whatever
reason, you may have to pay it to avoid your credit taking a hit and then
take your former spouse to court to get your money back.
Since it’s in the divorce agreement, a legally binding document,
you are entitled to ask the court to issue a judgement on your behalf.
Essentially, it’s critical to be vigilant and proactive and if possible,
to sever all financial ties with your soon-to-be ex during a divorce.
What Happens to Property in a Pennsylvania Divorce?
Contact Cairns Law Offices to speak to a Pittsburgh divorce lawyer about our cheap, no-fault divorces
that cost just $219!