Joint debts live on after a divorce. How to protect yourself

| Mar 6, 2014 | Family Law |

In a divorce, it is important to protect your financial interests, whether it is by securing proper spousal support or child support, or by ensuring that your marital debts are equally divided. In the process of reaching a financial settlement it is also prudent to make sure that jointly held debts do not come back to haunt you years after the divorce decree is signed.

This is especially important given the many promises that are made, and even reduced to writing and secured in a court order. After all, people’s financial circumstances could change, and such changes may affect you even though you are no longer married.

With that, there are two important considerations that divorcees should aware of. 

Creditors don’t care about your court order – If you have joint credit cards or outstanding loans, your court order, which directs your ex-spouse to continue to make payments on a debt, or to pay a debt off, does not apply to a third-party lender. So if your ex defaults on a joint credit agreement, the creditor can still seek payment from you.

Carefully consider an indemnity clause – Such a clause can be helpful if third parties attempt to bring suit against you in the event your ex-spouse defaults on payments. It essentially will specify your ex’s responsibilities in continuing such payments, and can give you a cause of action to seek a judgment for any amount of fees, penalties and interest that you may be saddled with in the event of a default. 

Source: HuffingtonPost.com “What your divorce attorney won’t tell you about marital debt,” Cathy Meyer, Mar. 2, 2014

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