By Marissa A. Oxman, Esq.
There are two important considerations in dealing with debt in a divorce – (1) who gets the debt in the divorce decree and (2) whether the lender will honor the divorce decree.
Spouses can always reach an agreement about who will receive debt in a divorce. If they cannot reach an agreement, who gets the debt generally depends on when the debt was incurred (during the marriage or outside of it), which spouse was responsible for incurring the debt, whether both spouses were aware the debt was being incurred, whether the lender intended to make the loan to one or both spouses, whether property securing the debt belongs to both spouses or just one, whether any property securing the debt is being awarded to one of the spouses in the divorce decree, and how much other property and debt each spouse is receiving through the divorce. Due to the state of the economy and many businesses trying to provide the best offers, borrowers have begun to use websites like www.citrusloans.co.uk to get loans without having to present or leave anything as collateral. This can help smoothen the divorce by a considerable margin as the distribution of assets can then take place easily without any hindrance. The Court will balance and weigh all of these factors and decide who gets the debt with the ultimate goal of equally dividing all the community property and the community debt.
Unfortunately, however, a lender is going to try and collect payment from anyone and everyone involved in the transaction regardless of who get the debt in the divorce decree. This is especially common with credit card companies who send payments to collections. Spouses can help the situation by having a copy of their divorce decrees to show lenders. Spouses can also protect themselves by including indemnity clauses in their divorce decrees. Indemnity clauses require the spouse who receives the debt to “hold the other harmless” and pay any attorneys’ fees reasonably necessary to prevent a spouse who did not receive the debt from being held responsible for it. It’s not a perfect solution, but it is the best the law has to offer.
This blog is not meant to provide legal advice, and the law may have changed since it was written. Every person and every case is different. You should speak with an attorney about your specific circumstances. If you are interested in dividing credit card debt in a divorce or in keeping lenders from collecting your spouse’s debts from you, Core Law Group can help. Schedule a consultation with one of our attorneys.