Divorce Guide

Divorce Guide

Who pays for debts made during the marriage ?

The most leading cause of the marital discord is money and it may also lead to divorce. In fact, debts like assets are included in community estate. In some states there are laws regarding debt to husband and debt to wife that assign responsibility for each debt.

If both of you have co-signed for a debt, then both will be responsible to repay the debt. Joint and several liability means that each spouse is responsible for the entire debt, but the spouses are jointly responsible for the debt. Many a times, the entire debt is on one spouse and he/she is held responsible. This is done and offset equalization payment is done. This includes the spouse with the debt gets more property in settlement than the other one who is left free from the debt.

In some states, if the debts are incurred to benefit the family, then both the spouses are responsible for it. This may include debt for house, furniture, child care, etc. since both of them benefited from these, both are responsible for repayment of these debts.

The expenses and debts incurred solely for the benefit of one spouse may be warded to the one benefiting form the debt. This may include debts incurred for vacation of one spouse, any hobby, etc.

The typical debt one spouse brings into a marriage is responsibility of that spouse. Only in case of special circumstances are both the spouses held responsible.

You can understand how you are responsible for debt assigned to your ex spouse. You can request for a original account agreement from the credit reporting agencies. If the account shows up in your report then you are obligated to pay the debt. The court or the divorce decree cannot protect you from this financial transaction. You can file a breach of contract against your spouse. Depending on the amount, you can request for relief in small claims court. For this you need to know the exact amount and where to file the suite depending upon the court with jurisdiction over the matter.

A better option is to research every account of the decree references and see how the account was established and who and what the creditors deems liable. It is in better interest of both to refinance the debt jointly and establish the debt in individuals name.

In case the credit scores are not good, you may consider liquidating the assets to repay the debts before the divorce.

You may consider taking the following actions in case your divorce is final.
  1. Close all joint accounts
  2. Request a credit report after the divorce is final and look for any errors and challenge them in writing
  3. Ask each individual creditor to send you duplicate notice of their joint accounts and monitor to ensure that payments are made in time
  4. Make an offer for accord and satisfaction by offering an amount of money in exchange of release of your liability
  5. Communicate to the credit agencies and notify them of your divorce and change in name if required
  6. Create debt reduction plan and make use of resources like consumer credit card, counseling services, etc

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