Frequently, a divorcing couple will have a significant amount of debt to divide. This can be tricky because if the debt is community debt, both parties are on the hook with the creditor regardless of what the divorce judgment says.
For example, let’s say your community debt of $10,000 was divided equally between you and your ex-spouse. You pay off your $5,000 worth of debt. Then you start getting annoying (possibly obnoxious) calls from a debt collector demanding that you repay their loan. You insist you have no such liability; then you realize this is a debt that your ex is supposed to pay off. You calmly explain to them that your ex is responsible for that loan. But instead of saying, “Oh, okay, take care,” they insist you are liable for the debt as well. And, unfortunately for you, they are probably correct.
Even though the community debt has been divided by court order, the creditor still has a claim against both parties. You will be on the hook for the debt unless your ex pays it.
Well, That’s Not Fair! What Can I Do?
If your ex has failed to pay off the debt as ordered in your divorce judgment, you can file a Request For Order asking the judge to find him in contempt. However, this may not be as effective as you would hope; a person cannot be thrown in jail for failing to pay a debt (we don’t have debtor’s prisons any more). If your ex has the means to pay but is refusing, you can ask the court to enforce the judgment with a levy or garnishment.
If your ex does not have the means to pay off the debt, you will need to deal with the debt yourself. Unfortunately, you are still liable. Talk with an attorney to discuss your best options before acting, and do so as soon as possible and preferably before discussing the debt with the creditor. Some possible options may include renegotiating the debt or not paying because the statute of limitations has run.
It is usually advisable to avoid dividing community debt in a divorce. One option is paying off community debt with community assets; for example, selling the house, using the equity to pay off community debt then dividing the remaining capital. Another option is for each spouse to take out a new, separate loan to pay off his or her portion of the community debt. With this method, each still owes one-half of the debt but it is no longer in both spouses’ names; thus, you are no longer liable for each other’s debt.
Talk To An Afforable Family Lawyer Today.
Dividing debt is just one of many factors to consider carefully when you are filing for divorce. At Shoreline Legal Group, we can advise you on property issues and assist you in drafting or negotiating a property settlement agreement. With affordable divorce options and success in helping previous family law clients, you can rely on us for your flat fee divorce needs. For a flat fee, we can offer legal coaching, divorce document preparation, and even tell you how to represent yourself in family court. Contact the low cost divorce attorneys at Shoreline Legal Group where we’re simplifying the legal process step by step. Serving Long Beach, Cerritos, Santa Ana, and Orange, CA as well as surrounding areas.