Dividing Debts and Liabilities in a Divorce

 

If there are bills incurred by you and your spouse, they must be divided along with your assets. A bill may stand in the name of one spouse, but that does not mean the other spouse cannot agree to pay it or share in its payment as part of the divorce agreement. 

You must realize that orders of the court or your agreement concerning division of debts do not affect your creditors. Whoever was originally liable on a debt remains liable on the debt even if the other spouse agrees to pay it. The creditor's recourse is against the spouse who owes the money�not the spouse who agreed to assume the debt. If your spouse agrees to pay one of your debts and fails to, you can sue your spouse, but your creditor can still sue you. 

Bear this in mind when dividing liabilities. Make certain your spouse has the financial responsibility to pay the debts he/she agrees to pay. If you believe your spouse may default, try to obtain security to insure his/her payments. You may take a mortgage on any real estate or personal property (a car or boat) conveyed to your spouse. You may require your spouse to escrow funds to ensure payment. 

Good credit is an asset worth protecting during a divorce. Unfortunately, you can easily lose your good credit, either because your spouse ran up big bills on your charge accounts and credit cards, or through your own inability to cope with finances amidst the turmoil and expense of divorce. Three timely steps can protect you from whatever your spouse may do to injure your credit:

 

1.     Immediately notify everyone you have charge privileges with that you will no longer be responsible for debts incurred by your spouse. Send the notice by certified mail so there can be no question of its receipt. 

2.     Destroy all credit cards you and your spouse have. Then contact the credit card companies in writing to freeze or cancel any accounts. (Although an account may be frozen at any time, the outstanding balance must be paid before the account can be closed.) Never assume that you have no liability on credit cards that stand only in your spouse's name�you may have signed or guaranteed the credit application years earlier. 

3.     Publish your disclaimer of liability for your spouse's debts incurred after the notice. In many states, publication is sufficient notice to third parties of your refusal to accept liability for debts incurred by your spouse after publication. Check the laws in your state and follow the procedures carefully.