Recently a client came to the Fort Huachuca Legal Assistance Division with a question about a credit card debt. The Soldier had gotten a divorce several years ago, and the divorce decree required the ex-spouse to pay the balance on the credit card. The Soldier had just gotten a call from a debt collector indicating the bill had been in arrears for several months. The debt collector demanded payment from the Soldier and was not interested in what the divorce decree said about the ex-spouse being responsible for repayment.
Unfortunately, this happens quite often in divorce situations. If a joint debt is made during the marriage, it is often made by a contract between the creditor and both spouses. Many times, when the marriage breaks up, the parties will enter into an agreement, or the court will enter an order, determining which party is responsible for paying each of the debts. However, the creditor is never a party to the agreement or the court action in which the order was entered. As a result, neither the agreement nor the court order is binding on the creditor. As far as the creditor is concerned, both parties are still liable for the debt. Since the creditor just wants to be paid, and doesn’t care who pays, the creditor will often go after both parties until the debt is paid in full.
There are a couple of ways for people to protect themselves from this situation. First, if at all possible, the best remedy is to secure from the creditor a release of liability for the spouse who is not going to be responsible for the debt. Sometimes, this will mean that the responsible spouse will have to refinance the debt in his or her own name. However, if the paying spouse doesn’t have good credit, this may not be an option. Sometimes, though rarely, a creditor may agree to simply release the nonpaying spouse from the debt. It certainly doesn’t hurt to ask, and if the answer is “yes,” be sure to get it in writing. An oral release is not legally effective.
Second, the nonpaying spouse may want to consider becoming the paying spouse. Agree to be responsible for the debt, conditioned on an agreement by the other spouse to pay you an amount equal to what would have been the debt payment. The upside of this arrangement is the paying spouse has control over the payment of the debt and knows that it gets done. The downside is that if the ex-spouse does not make the timely payment to the paying spouse, that person’s credit is at risk. The paying spouse will have to try to come up with funds to make the payment and then take action against the ex-spouse for reimbursement.
Third, if the other spouse is going to be responsible for making payments on a joint debt, the non-paying spouse should insist on an agreement that requires him or her to be provided with evidence, on a continuing basis, that payments are being made. Staying informed will help the non-paying spouse to take appropriate steps to be protected from default by the other spouse on these debts.
Those who find themselves in a situation in which an ex-spouse fails to comply with an agreement or court order and the creditor is calling to demand payment, the only possible remedy is to seek some accommodation from the creditor, such as a cash settlement or payment schedule. Of course, a person also should take action against the ex-spouse based on the agreement or court-ordered requirement to make payment on the debt.
Those who are in this situation may want to seek legal advice before doing anything else. Call the Fort Huachuca Legal Assistance Office and make an appointment to speak with an attorney. The number is 533.2009.