Sunday, July 26, 2009

Divorced and Still on Marital Debt?

First, what does the Decree of Dissolution say about this debt?

If it says that one spouse was to hold harmless on the debt and then this spouse does cause harm - such as the other spouse gets sued for the debt - then spouse who was to hold the other harmless is looking at legal action against them. The legal action could be anything from contempt to a civil suit, but the emphasis will be on getting monetary reimbursement.

If the Decree says that other party is to do something positive (and this can be In conjunction with holding the other party harmless) and does not, then the other party is looking at a contempt action to do what was not done. A few months ago I reviewed a case where all the other party was to do was to list a home for sale, and they did that but the house did not sell. No contempt was my opinion. The Decree was just not specific enough about what would happen if there was no sale.

For more information on marital debts, please follow the link below to my archive of articles on this subject.

If you need a lawyer to deal with marital debt, then give me a call at 765-641-7906.

With more people doing their own divorces, I expect this will be an increasing problem - and those same people will find that these errors will mean more attorney fees paid out than if they had hired counsel for their divorce.

Remember that unless the debt is not refinanced, you remain obligated on the debt. That is simple contract law. You do not divorce your creditors, only your spouses.

However, credit cards do have a bit of an exception to this rule. A person can be an accommodation party - right to use the card but no obligation to pay. With credit cards, it needs to be known whether a party is truly obligated or merely an accommodation party.

And what if the other party files bankruptcy? If they were required to hold you harmless, then get yourself to a lawyer who knows bankruptcy law. Not all marital debts are dischargeable. I will be writing more on this in the next few months.

What is not clear is what happens if the harm is to one's credit report. If the debt was paid and the card no longer in use, then you need to follow the procedure under the Fair Credit Reporting Act to deal with credit report problems. If the problem is late payments, then it may be possible to use the divorce court's contempt powers to deal with the problem. What will be required is some showing of actual harm (such as a denial of credit).

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