Debt and Divorce
In most states, you are fully liable for debt if your name appears on the account. If you have joint credit cards or loans, a creditor can come after either spouse for full payment after a divorce. If you live in a community property state, you may even be liable for debt incurred solely by your spouse during the time you were married.
Unfortunately, there is no way to legally sever your responsibility to a creditor. If you and your spouse have debt, part of your settlement agreement will outline who is responsible for paying off each credit account. As part of the agreement, you will agree to indemnify each other (provide reimbursement or damages payments) in the event one of you defaults on debt payments.
Bankruptcy and Divorce
If your spouse files for bankruptcy, creditors will still come after you for payment of your jointly held debts. Under the terms of your divorce agreement, you may be able to sue your ex-spouse for repayment when the creditor cannot.
Just as marital assets must be divided during a divorce, responsibility for debts also needs to be divided equitably. Cathy will take your complete financial picture into account to help you figure out how division of debt will impact your divorce settlement.