Dividing Debts in Divorce

August 17, 2012 (Press-News.org) Divorcing parties may want to get out of a marriage with the property they feel they deserve, but they really want to avoid being stuck with their ex's debt. Stories abound about feuding spouses taking a "scorched earth" approach to failing marriages and running up credit card debt to punish the financially vulnerable spouse. In other situations, the split is amicable and the parties simply agree to divide the entire debt in half and pay their respective share.

Regardless of the situation, there is a common misperception that agreements included in a court order control a creditor's ability to seek payment for joint debts. Unfortunately, creditors do not have to honor these accords and may pursue whoever is named on the loan or credit agreement. For example, if you have a joint credit card with your spouse or partner, and he or she agrees to pay it off in as a way to balance your property settlement, the credit card company can still hold you liable. From their prospective, they are unaffected by the court's order, and it does not change the original contract signed with them.

With that in mind, it is important to know the difference between joint credit accounts, co-signers and authorized users when dividing debt during a divorce.

Joint credit: This means that you are a joint owner of the account. The money or credit is yours to use, but you are responsible for paying the bill. However, joint owners may be held liable for the entire outstanding balance, not just half of it.

Co-signer: The credit is in your spouse or partner's name, but you cannot use it. However, you pledged to pay the bill in the event the account holder could not do so. If they default on their payments, their mistakes may be reflected on your credit report.

Authorized users: The credit account belongs to your spouse or partner. While you may use the account, you have little (if any) responsibility for making payments on the account. If they default, the lender may still pursue you for payment, even if they may not do so legally.

These are a few things divorcing parties must consider when dividing their debt. If you have further questions regarding debt division, an experienced family law attorney can assist you.

Article provided by Anthony C Starks Law Office
Visit us at www.anthonystarkslaw.com