During a marriage, many Kentucky couples take out debts such as car loans, mortgages and credit cards together. While there may be combined financial resources to cover these debts, this may not be an issue. However, in a divorce, those joint debts can have significant impact on each party’s future.
Whether a Kentucky couple decides to use collaborative divorce, mediation or the courts to come to an agreement regarding a divorce settlement, each party may be assigned certain debts to pay. Each former spouse may be under the impression that this contract is enough to alleviate his or her responsibility for a particular debt. After all, the divorce settlement was approved by the court, which makes it an order that each of them must follow.
That may be true, but that does not mean that creditors are bound by the agreement, or even care about it. What creditors care about is that both parties agreed to pay the debt. If a spouse takes on a debt in the divorce but fails to pay it, the creditor can, and more than likely will, look to the other spouse for payment. It will take more than just making the agreement to relieve each spouse from paying the debts assumed by the other.
Proper division of debts is just one of the many reasons why going it alone in a divorce could be hazardous to a party’s post-divorce financial health. Without the appropriate understanding of the additional steps that need to be taken in order to protect each individual’s financial future, disaster could be around any corner. Instead, it may be a good idea to seek out some advice and assistance regarding how to deal with the marital debts in a way that allows each party the best opportunity of achieving some financial security in the future.
Source: fool.com, “You Could Get Stuck With Your Spouse’s Debt in Divorce“, Christy Bieber, Nov. 16, 2017