Before your divorce is final, you will want to protect yourself against incurring any more joint debt for which you may be liable once the divorce judgment is final. Because while a final divorce decree will apply to you and your ex-spouse, it has no bearing on your joint creditors. If your ex has agreed to pay joint debts as part of your final settlement and then defaults, creditors could come after you.
You can protect yourself by separating your finances from those of your spouse as soon as you can. First, do the things that you have control over — remove your spouse as an authorized user on any of your personal accounts, and close joint credit card accounts. However, be sure to discuss these steps with your divorce attorney before you take action. If closing joint accounts could lead to financial hardship for your spouse, this may be frowned upon by the divorce court.
Protect yourself in your divorce judgment
When it comes to marital debt, your primary goal should be to pay it all off before the divorce is finalized. If that is not possible, then you need to take steps to protect yourself by including debt resolution provisions in your divorce judgment. For example:
If the marital home is being kept by one spouse, the mortgage should be refinanced by that spouse. Consider including a provision that sets a deadline for refinancing and states that if the deadline is missed, the house must be sold and proceeds split.
If there are outstanding joint car loans, they should also be refinanced by the spouse keeping each car. If the loan is not resolved in a set period of time, you may want to include a provision that allows the other spouse to take possession of the vehicle and sell it.
If there are other marital debts that cannot be fully paid off, you should include a stipulation in the judgment that rules out any additional joint obligations post-divorce. Sometimes credit card companies will not allow a joint account holder to be removed before the balance is paid in full.
Talk to your attorney about incorporating provisions in the divorce judgment that protect you financially, including setting deadlines for when joint debts are to be paid off and remedies for you in case your ex fails to live up to his or her obligations.
You can rely on Murphy & Cistaro to skillfully negotiate and mediate your issues to a satisfactory resolution. Should the need arise, you can also count on our experience for being aggressive litigators if the situation calls for a more assertive response. Contact us today for your free consultation.