Many people focus heavily on trying to protect their assets when they get divorced. Property division negotiations naturally result in some losses as couples are forced into splitting their marital estates.
Along the way, however, people must also find a way to split any debt they share together. Divorcing spouses should learn what this may mean for them once their divorce has been completed.
A divorce decree alone may not protect spouses
Responsibility for any shared debt agreed upon during negotiations between spouses would naturally be detailed in the couple’s divorce decree. However, as explained by U.S. News and World Report, that decree may not protect the non-liable spouse from collection efforts by the creditor should the other person fail to repay the debt.
When a debt account retains both spouse’s names, the creditor may continue to view both parties are responsible for the debt, regardless of any terms outlined in a divorce settlement.
The Mortgage Reports indicates that the same philosophy holds true for home loans. If one person stays in the family home but does not make the mortgage payments as promised, the other person may end up on the hook for those payments.
Missed or late payment reports to credit bureaus may appear on the credit reports of both spouses.
Protecting credit and a financial future
Paying off joint debt prior to divorcing is one way some people avoid financial entanglements post-divorce. Another option is to have any remaining debts transferred to accounts in the name of the person identified as the responsible party per the divorce agreement.