Demystifying the Myths about credit - divorce and debt

I got divorced. My spouse was ordered to pay the credit card debts so I don't have to: False

You get divorced and as part of the settlement, your (now) ex-spouse was ordered to pay the debts (car or mortgage note, credit cards, medical bills, etc.). Some divorce lawyers may tell you that your creditors will honor the divorce decree and relieve you of the obligations. I am sorry, they are wrong. Some creditors may. Most often though they will pursue you as well, if the debt remains unpaid. Further, they will most likely report the negatives on your credit report. This will hurt your FICO score and future ability to obtain credit for years to come. Not to mention that you could still be sued by your creditor for that debt.

In general, a Court cannot overturn contracts between individuals unless they are fraudulent or not lawful. A divorce does not apply, so the contract remains in effect until the debts are paid.

When two people (married or not, related or not) apply for credit, they sign a legal agreement with the creditor to pay back that debt. Two applicants are better than one in the creditors' eyes. The reason is that if the loan goes into default (stop making payments on the credit cards, the mortgage or car loan), the creditor can go after both parties. This increases their odds of collecting on the debt.

No matter what your divorce papers say, the only way to get out of the joint obligation is to have all of the original parties to the contract, amend the contract and release you from the obligation. This includes the creditor. Good luck.

Now, you could drag your "ex" back into divorce Court to seek some type of relief but, it won't stop the credit card companies from calling or pursuing you to get their money.

Worst yet, if your "ex" stops making payments on the car or house, the car can get repossessed and the lender may choose to foreclose on the house. If the lender does repossess the car and sells it at auction, you may still have a deficiency balance owed (the amount you originally owed the creditor, less what they got for selling the car at auction). The same can apply with your mortgage.

No one goes into a marriage, expecting to get divorced. It's a grueling and emotional experience. However, you must look at the settlement of your financial obligations as a vital part of your clean up efforts to move on with both of your lives. If not, you'll be guaranteed to be reminded of each other for years to come..and not in the fondest of ways.

If you find yourself scrambling to make ends meet or just want to learn more about your financial options,
give us a call 1-877-510-1001.