One of the most frequently asked questions on the various debt and bankruptcy forums is whether a person is still responsible for debts their former spouse agreed to pay (or was ordered to pay) in a divorce settlement or decree. For example, a Court may divide the debts and order the husband to pay the credit card debt even if the credit cards were joint debts. The Court can give possession of the jointly-owned house to one spouse and order that spouse to make payments on the loan until it can be sold or refinanced in only one spouse’s name. Many people, quite understandably, believe that if a divorce Court clearly orders the former spouse to pay a debt, it means they are no longer responsible to pay it. Court ORDER! Makes sense, right? All of us lawyers are always preaching about reading orders to see what they actually say. Unfortunately, this is not the case.
One of the basic principles of Court proceedings is that (except in unusual circumstances) they only decide issues between the parties actually in the case — i.e., the “plaintiff,” “defendant,” etc. When you and your spouse (or other person or a business) jointly borrow money or use credit cards, you have a joint obligation to the lender or credit card company. That means you are both liable for the debt based on your contract with the creditor. The creditor has a legal right to rely on that contract to collect the debt from either or both of you. When you get divorced, the court proceeding is between you and your spouse only, and your creditors are not a part of that lawsuit. Therefore, the court cannot bind the creditor to its orders or change the creditor’s legal rights under its contracts. What the divorce Court does is determine who pays what only between you and your spouse. If your former spouse is supposed to pay those credit cards every month and stops, the credit card company can still come after you for the balance and put the late payments on your credit report. They do not care about your divorce decree. Sure, you might be able to go back to divorce Court and complain and try to get a contempt order, but that is usually after the damage is done and it just costs more time and fees. Bankruptcy and debt lawyers like us only get these questions after the divorce is over. We do not get invited to settlement conferences and final divorce hearings, as otherwise we would always object to these agreements and orders. If you are in this situation, first try to work it out if possible. Make payments if you can to save your credit, then speak to your lawyer and hope the problems you thought were resolved can be finally be fixed for good.