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The Impact of Dividing Debts at Divorce
Allison Gerli • September 22, 2020
What Happens To Debt After Divorce? Who is Responsible? What You Need To Know.
You and your spouse may have accumulated debts of various types during the course of your marriage. If so, you are probably concerned about how to divide those debts and what the consequences will be if the debts are not paid, particularly if you do not trust that your spouse will be responsible about making payments.
If a debt was undertaken by you and your spouse jointly (generally the case for home mortgage and car loans, and often the case for credit cards), you and your spouse probably are jointly and severally liable
for payment of that debt. This means that the creditor can pursue either or both of you to obtain payment.
The creditor (bank, mortgage company, department store, credit card company, etc.)
is not a party to your dissolution of marriage proceeding. In the divorce settlement, the debts will be allocated between you and your spouse by agreement or, if you have a trial, the Judge will order who is responsible for each debt.
Despite the allocation of debt in a divorce judgment, debts in joint names will remain in joint names, unless the person the debt is allocated removes the other party from responsibility. The creditor is not bound by any agreements reached between the two of you as to who is responsible post-divorce, nor is it bound by a court order as to who is responsible for the debt. A creditor can still pursue either you or your spouse for an unpaid debt, regardless of who the court designates to pay the debt.
As a result, it is important to understand that, even when a court specifically orders that one party is solely responsible for payment of a home mortgage or other loan or other debt, if both parties’ names remain on the loan or debt, both parties remain responsible for its payment. Transfer of the title of your home by quitclaim or other deed does not in any way alter your obligation under an existing mortgage loan.
The divorce judgment may include an indemnification and hold harmless clause. Typically, these provisions are used so that a party who agrees or is ordered to pay a certain debt is responsible for reimbursing the other party if the other party ends up paying the debt instead. Although these clauses do provide you with recourse through the courts should your former spouse fail to pay a debt, as a practical matter, if the creditor has been unable to collect form your former spouse, your chances of doing so are not much better. Your goal should be to reduce the risk of problems related to the marital debt post-divorce.
What To Consider When Settling Your Case
If you are hoping to settle your case, it is important to consider your spouse’s likelihood to responsibly pay the debt that is allocated in the settlement. The spouse’s failure to pay, or failure to pay on time, can affect your credit rating and of course impact you in other ways.
Sometimes parties agree to delay selling or refinancing the house for a period of years so that one of the spouses can remain in it after the divorce. Often that spouse is not able to qualify to refinance at the time of divorce. If you are the non-resident spouse and you are considering this option, you need to consider what this could mean if you want to purchase a residence or take on some other large debt before the time for your spouse to refinance or sell the home arrives. The obligation on the mortgage may result in your being denied credit, even if your spouse is paying the mortgage on time. This is something that we may need to discuss as settlement options are generated.
It may be important for both spouses to obtain credit reports to ensure all debt is being disclosed and addressed as part of the divorce process. This is something that can be requested of both parties to a divorce.
Please discuss your current debt situation with your attorney so that the appropriate measures such as closing accounts may be taken to protect your credit rating and preserve martial assets. You need to be aware of all outstanding debts when preparing settlement options or proposing how property and debt will be divided at trial.
If you have questions or concerns about your situation, the
attorneys at The Center for Family Law are here to help.
The Center for Family Law is excited to announce the start of its fourth year hosting the Second Saturday Divorce Workshops, providing valuable support and guidance to individuals navigating the divorce process.
The holiday season can be a balancing act for all parents, but it can be especially challenging for divorced parents who need to coordinate plans with a former spouse and navigate interactions with new partners. While some stress is to be expected, with careful planning, flexibility, and the right mindset, you can make the holidays smoother for everyone. Here are a few tips to help you manage. Prioritizing the Children. The holidays are a time for children, and their well-being should be the focus of the schedule. Whether it's your first holiday post-divorce or you have had a few years to adjust, there are simple steps you can take to make the season easier for them. Create a Joint Plan. Collaborate with your ex to ensure the children can spend time with both of you without feeling torn. A clear, shared plan helps avoid confusion and conflict. This might involve splitting the day between both households or longer periods of time with each parent to allow for out-of-town travel to visit relatives. It is important that parents are on the same page on what schedule will be followed and that is communicated to the children as a joint plan. Balance Traditions with Flexibility. It is natural to want to keep cherished family traditions, but flexibility is key. Discuss with your co-parent which traditions are most important and find a realistic way to divide them. This ensures that the kids do not feel pressured to choose between one tradition or family, allowing them to enjoy special moments with both sides. Create New Traditions. This is an opportunity to start fresh. Let go of old expectations and focus on what will bring joy to your current family setup. Whether changing when your holiday meal occurs or coming up with new ways to celebrate with those who matter now, these changes can redefine your holiday experience in a way that reflects your family as it is today. Remember, children care more about spending time with you and celebrating together than about the exact day. [The Right] Communication is Key. Keeping communication focused on the kids can help prevent old conflicts from resurfacing. Keep discussions brief and to the point. Set times to address important matters and confirm plans through a message or email to ensure everyone is aligned and to prevent miscommunication. Involving New Partners. Whether it is you or your ex with a new partner, you should be mindful of how this change can stir emotions and make the situation feel uncertain. If planning to include a new partner in holiday activities, having a conversation with your ex beforehand is best. Discuss your plans for the day and make sure your ex is comfortable with the arrangement. If you are nervous about being around your ex’s new partner, remember that you have the right to decide how much or how little to engage with this new person, all while keeping things positive and calm for the children. Children may also need time to adjust to a new partner, particularly if the relationship is still fresh. Monitor how they are coping and give them space to process these changes. Do not force interactions, and if possible, let the relationship evolve naturally. Spending Time with Former In-Laws. Another challenge during the holidays for separated parents is dealing with ex-in-laws. Seeing them may feel awkward, but it is often necessary for the children's sake. If spending time with your ex-in-laws feels too emotionally challenging, be honest with yourself and them. It is okay to politely decline an invitation if it being there would cause too much stress. Regardless of how you feel about your ex-in-laws, remember that ex-in laws are still important figures in your children’s lives, and it is often best for the kids if you maintain a relationship with them. Encourage your children to spend time with their grandparents or other relatives from your ex’s family when possible. Remember even when feeling frustrated, remind yourself that cooperation between parents benefits the children, making these moments more manageable.
(This article was originally posted in November 2024 by Courtney Green on the website of The Bar Association of Metropolitan St. Louis and can be found here .) Every year, a heartwarming and competitive event takes place that not only tests participants’ knowledge but also makes a significant impact in the lives of children affected by the criminal justice system. The annual Motion for Kids Trivia Night hosted by BAMSL’s Young Lawyers Division, has become a beloved tradition, blending fun with philanthropy to raise funds for the Saint Louis Bar Foundation’s Motion for Kids holiday event aimed at providing a magical holiday experience for children in the Metropolitan St. Louis area, most of whom are currently in foster care. A Night of Fun and Philanthropy The 2024 trivia night will be held at the Parkway United Church of Christ and draws participants from the St. Louis legal community, along with friends, family, and colleagues to compete in a lively atmosphere filled with friendly competition. The trivia night is made possible by sponsors in the legal community who play a vital role, providing financial backing and in-kind donations that help cover costs and enhance the evening’s festivities. Additionally, gracious volunteers and members of the Young Lawyers’ Division donate their time to help organize the event and ensure its success. Adding in a twist each year, the trivia night themes have ranged from the 90’s to “The Eras tour”. This years’ theme is a spooky, legal-adjacent: “Whodunnit? Beyond a Reasonable Doubt.” As the trivia rounds unfold, teams will battle it out to compete for bragging rights (and potential prizes). The questions are crafted to be both challenging and entertaining, ensuring that everyone, from trivia novices to seasoned experts, can contribute. Silent Auction, 50/50 Raffle, & Games Galore One of the highlights of the evening is the silent auction, featuring an array of enticing items donated by generous St. Louis based businesses, community members, and local firms. Ranging from gift certificates to tickets for local sporting events, attendees can bet big on items, knowing that every item raised will directly benefit the Motion for Kids holiday event. The auction not only raises vital funds but also showcases the community’s creativity and generosity. Additionally, there are other opportunities to show support for the Motion for Kids event at the trivia night, including a 50/50 raffle, and mini-games in-between rounds, which are sure to stir up excitement. The proceeds raised from these games will also be given directly to Motion for Kids. Impact on Children’s Lives The funds raised during trivia night play a crucial role in making the annual holiday party a reality. The Motion for Kids event provides a joyful experience for children who often face significant challenges in their young lives. For many of these children, the holiday party is one of the few occasions where they can experience the warmth of community, receive gifts, and enjoy festive activities in a safe and welcoming environment. BAMSL volunteers work tirelessly to create a magical atmosphere, complete with decorations, games, and a visit with Santa Claus. The smiles on the children’s faces during the party serve as a reminder of the positive impact the community can make when it comes together for a common cause. A Community Effort The Young Lawyers’ Division Trivia Night is more than just a fundraising event; it’s a testament to the power of community. Local firms, businesses, individuals, and organizations come together to ensure that children impacted by the criminal justice system feel loved and supported during the holiday season. The success of this event highlights how collective efforts can bring joy and hope to those who need it most. It is the Young Lawyers’ Division goal to not only raise money for the Motion for Kids holiday event, but to encourage a sense of accomplishment and commitment from trivia night attendees for the role they have played in the lives of these children. Trivia Night has become a cherished tradition, one that reinforces the message that together, we can create a brighter future for our most vulnerable children.
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