Confusion Over Division of Debts Rampant in Divorce Cases
It’s an all-too-common scenario: you get your divorce decree and it says that your husband is supposed to pay your outstanding credit card bill, or that your wife has to repay a personal loan the two of you took out during your marriage. Whether you agreed to that division of responsibilities or the court decided which of you should pay which bills, it’s a court order now, and ignoring it can bring legal sanctions.
Still, many people do ignore these orders, either intentionally or because financial circumstances don’t allow them to make the payments as planned. That’s typically when the other spouse gets a call from the credit card company or the bank demanding payment. Of course, most people aren’t troubled by the initial call; they simply explain that they’re no longer responsible for the debt. And then something happens that surprises most people. The credit card company or the bank tells them they’re wrong.
The next step is a call to the divorce lawyer. “Tell them I don’t have to pay this!” And that can bring another ugly surprise, because in the vast majority of cases the lawyer explains that the person IS still responsible for that debt.
When a married couple applies jointly for credit, both of them take on a legal obligation. When the parties divorce, the credit card company or the bank isn’t a party to the divorce. The creditor isn’t in the courtroom. And the divorce court has no power to change the terms of the contract the couple entered into.
Thus, when the spouse who wasn’t ordered to pay the debt produces a copy of the divorce decree and says, “Look, I don’t have to pay this!” the creditor most often says, “That has nothing to do with us.” They will often continue to pursue the debt. They will often turn the claim over to collections, and it will often show up on both spouses’ credit reports as a collection item. In some cases, they even file lawsuits. And win.
That doesn’t mean that the division of debts in the divorce decree is meaningless, but it has to be enforced against the right person–the spouse who was supposed to be responsible for the debt.
