Who is responsible for jointly held debts after a divorce?
This article looks at how divorce affects debt liability, especially if one party fails to make payments.
Divorcing couples should take steps to protect themselves financially
As an equitable distribution state, debts are divided fairly and equitably between former spouses following a divorce in Arkansas. However, as many people later learn, problems can arise when one former spouse fails to pay for the debt that was his or her responsibility under a divorce decree. According to Fox Business, there are a number of steps every divorcing person should take to ensure their credit score and finances are protected in the aftermath of a divorce.
Limitations of a divorce decree
During a divorce, the divorcing couple or a court will decide how debts that were acquired during marriage should be divided. In most cases, courts will try to divide joint debt fairly evenly between both spouses, although the courts may deviate from such a division if they find that one spouse was particularly irresponsible in money matters, such as by using credit cards to fund a gambling problem.
According to Forbes, however, spouses should be aware that just because a divorce decree requires one spouse to pay for a debt, that doesn’t mean creditors won’t come after the other spouse in the event of nonpayment. So long as both spouses’ names are on the debt then, as far as creditors are concerned, the debt remains the responsibility of both spouses, regardless of what a divorce decree says.
One of the most important things people can do before and during a divorce is to divide their accounts as much as possible from their soon-to-be ex-spouse. While it is impossible to close or remove a name from a jointly held account unless the balance has been paid off, people can ask that the account be frozen so that the debt on that account cannot be driven up any higher. Once the account has been paid off, it should be closed immediately.
Spouses should never rely on a promise made by the other spouse that he or she will take responsibility for a jointly held debt. In such cases, move the debt from a joint account to an individual account and then work with attorneys to readjust the division of assets to account for the transfer. By doing so, people will be better protected in case the other spouse were to become irresponsible with paying down debts that were rightfully his or hers.
The above is just a sample of how people can protect themselves financially while going through a divorce. Divorce, however, has a large and often complicated effect on debts and every couple’s situation is bound to present unique challenges.
Because of the complicated nature of divorce and debt, it is imperative for anybody going through or preparing for a divorce to contact a qualified family law attorney as soon as possible. An experienced attorney can advise clients about how equitable distribution laws apply to their particular family law needs and what they need to know about dividing assets and debts during a divorce.
Keywords: divorce, debt