Debts in Divorce

THE MARRIAGE ZONE

Debts In Divorce
By
Christopher C. Meyer, Esq.  May 2007


How are debts handled in a divorce? Debts are handled in the same manner as assets in terms of classification as separate or marital. If the debt is marital, it will be divided between the parties. If the debt is separate, it is the sole responsibility of one of the parties.

What happens if one of the parties fails to pay the portion of the marital debt they have been ordered to pay? There are two aspects to this problem.

From the creditor’s perspective, it does not matter that one of the parties has been ordered to pay. The creditor can still go after the other party for the whole marital debt. This is due to the contract clause of the United States Constitution. The contract clause prohibits states from “impairing the obligation of contracts.” From your perspective, you will be required to pay. This may seem unfair, but it’s the law!

If you get stuck having to pay what your former spouse was ordered to pay, you do have a remedy. You can go after your former spouse and make them pay. This process is called “indemnification”. However, you can’t get blood from a stone, and your credit rating can get clobbered. All you may wind up with is an uncollectible judgment against your former spouse. Welcome to the marriage zone!

A way to avoid the deadbeat former spouse (DFS) syndrome is to construct your settlement so that as much debt as possible is paid off from the marital assets. Another method is to have the other party refinance the debt to have you removed from it. This often happens with regard to mortgages on homes. Insurance should also be considered for security purposes if you are concerned that the other party won’t be around to make all the payments.

It pays to give some thought to protecting yourself from a deadbeat former spouse before you get divorced. The debt you rightfully thought was someone else’s responsibility can rise up and bite you.

Chris Meyer is an attorney practicing family law in Monument. Chris has been practicing law since 1977. He is a former prosecutor and is licensed to practice law in Colorado, Florida, California and Wisconsin. Chris can be contacted at 719-488-9395. Chris’s website (www.cmeyerlaw.com) has a lot of divorce and family law information.