Why Is the Bank Suing Me? My Ex Got That Bill in the Divorce!

This is a problem that comes up all the time.  A couple gets divorced and one party is ordered to pay certain debts.  That party then defaults on the debt and the creditor starts coming after the other party who thought the divorce decree let them off the hook.  It's a very unpleasant surprise.

Unfortunately, a divorce is just between the parties.  As a general rule, creditors and other parties are not a party to the divorce.  Consequently, the trial court does not have jurisdiction over the divorcing parties' creditors and cannot force the creditor to release either of the parties.  Therefore,
a divorce decree or settlement agreement will usually include language that specifies that the other party will "indemnify and hold the other party harmless."  Normally, the person assuming the debt is also required to use his/her "best good faith efforts" to refinance the debt out of the other party's name.  This at least gives the other spouse some recourse against the other spouse in the event of a default, but the decree, itself, does not remove either party's name from the debt.

As the property and debts are divided in the divorce, whether by the judge or by agreement, it is imperative to inquire whether each party can service and maintain the debt he/she is assuming in the divorce.  If you have more questions, contact the Alford Law Office.

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