The following was originally posted on Patch.com by Bruce E. Friedman as part of a weekly series written by the attorneys of Paule, Camazine and Blumenthal, P.C. called From the Lawyer’s Desk. If you have any areas of the law that you would like discussed as part of that series, please contact us at firstname.lastname@example.org.
The divorce is finally over. The settlement required your ex-spouse to pay for certain joint debts, such as the mortgage, an auto loan or a credit card. You later discover that your ex-spouse did not pay at all or did not pay timely when your credit score was checked during an application for a new loan or credit card. Why was your credit score damaged when your ex-spouse was ordered to pay the debts? Unfortunately, a divorce settlement with regard to joint debts, such as a home mortgage, auto loan or joint credit card, is only binding on you and your ex-spouse and is not binding on the creditor and does not eliminate your liability on the debt.
You had a few basic things to consider before the divorce was concluded in order to avoid this common problem.
First, sell the house or the car and make sure the mortgage or auto loan is paid off.
Second, use other funds, if available, to pay off the mortgage, auto loan or joint credit cards.
Third, make sure the mortgage or auto loan is re-financed, and that the joint credit card balance is transferred to an account that will be in the name of your ex-spouse or, if permitted by the creditor, make sure you can be removed as an obligated party. This can be a risky option since it may be uncertain if your ex-spouse will qualify for a re-financing or that you can be removed as an obligated party.
All of these options should be considered and possibly addressed in settlement negotiations. This does not always happen and, if your case has to be decided by trial, courts cannot always order things that the parties can put in a settlement agreement. Further, in this day and age, one or more of these options may not be available based on your financial circumstances. So, it is crucial that you discuss these issues with your attorney BEFORE your case is concluded, whether by settlement or by trial, in order to determine the best course of action to protect you from debts you are not planning on being responsible for after you are divorced.