Much to the surprise of many divorcing couples, most credit card debt (and other unsecured debts such as income taxes) incurred during marriage is a community obligation, for which both parties are equally responsible. This can be one of the most contentious areas of a divorce, full of resentment and blame, especially between a saver spouse and a spender spouse.
Often, when couples do their own divorce, they devise a plan where one spouse will assume responsibility for paying the community credit card debt in exchange for an asset or a reduction in, or waiver of, spousal support. They write this provision into their Marital Settlement Agreement (“MSA”), which becomes part of the divorce Judgment, and they feel as if the credit card debt (or other debt) is a done deal.
WARNING: Do not count on the other party paying debts in your name.
The problem arises later, when the party who promised to pay the credit card debt fails to do so, or if that party declares bankruptcy. If the debt has your name on it, then the creditor can collect from you and/or ding your credit score, despite the divorce Judgment assigning the debt to the other party. The creditor was not a party to the MSA nor to the divorce Judgment, so the creditor is not bound by the divorce Judgment.
You cannot prevent the creditor from collecting from you. Your only recourse would be to enforce the divorce Judgment against your former spouse and try to get reimbursed from your former spouse for the delinquent payments.
How to Avoid this Mistake: Realize that if your name is on the debt, the creditor can collect from you, no matter what the MSA or the divorce Judgment says. You can avoid the nasty surprises described above by either making sure all debts in your name are paid in full immediately or by being the one responsible for making the payments.
We hope the above quick info on unsecured debts is helpful and informative. It is not a detailed or comprehensive discussion of the subject. You should not rely on the above information without first consulting an expert to determine how the current laws apply to your particular situation and circumstances.
The Law Office of Andrew J. McCall represents Family Law litigants in Contra Costa & Solano Counties, so, if you know someone who has been trying to do his/her own divorce and is having problems, have him/her contact us to discuss representation or consultation or just help with forms.