In a divorce the court will not only divide the marital assets between the spouses (the good), but will also equitably divide the debts and liabilities (the bad). When negotiating a division of debt, it is important to know which spouse is legally liable to the creditor for the debt.
Keep in mind that an award of debt in a divorce does not change the creditor-debtor relationship. If both parties’ names are attached to a debt, the creditor can still pursue either, or both parties for payment, regardless of who is awarded the debt in the divorce. Joint debt will also continue to appear on both parties’ credit reports and could impact eligibility for future credit, especially if the party awarded the debt defaults or has late payments which are reported to both parties’ credit reports. Whenever possible, a party who is ordered to assume joint debt in a divorce should also be required to pay the debt immediately or at least “refinance” the debt removing the other’s name from legal liability to the creditor.
If you are faced with divorce or legal separation, contact Derek Trosvig at 320-763-3141.
Disclaimer: This article is for general informational purposes only and is not legal advice. For legal advice regarding your particular situation, please retain an attorney as soon as possible so as to not lose any legal rights you may have.