Ex-spouse Missing Payments? You Might be Held Responsible
Going through a divorce can be an extremely difficult time. The decision to finally end a marriage and move on usually comes after a lot of soul-searching. It is not easy to walk away from someone who has been such a major part of your life. The entire process can be a long, drawn-out affair that be emotionally draining, and it may be tempting to try to get the divorce over as soon as possible to move on.
However, most people do not realize the severe economic challenges that may arise as a result of the divorce until it is too late. Whether it is a house, car or credit card payment, these debts may come back to haunt you. No matter how you decide to divide the debts and assets in the divorce, you may be held responsible if your ex-spouse decides not to pay. Going from two incomes to one is already going to be a challenge. If you are not able to handle all of the resulting debts, you may find ultimately need to file for Chapter 7 or Chapter 13 bankruptcy.
Know What Your Documents Say
If you are reviewing your budget and trying to figure out how you will be able to afford your divorce, you are not alone. During these difficult economic times, many people have had a tough time making ends meet. Home values have plummeted, especially in Florida, and unemployment remains high. Families may have trouble staying on top of bills, which may have an impact on future expenses.
Some of the major assets present in many divorces include the marital home and any vehicles that the couple may own. Many couples have monthly mortgage and car payments that take up a significant portion of their monthly income.
Many homeowners are trapped in underwater mortgages, meaning that the couple may owe more than the home is worth. While many divorces once featured battles over who was able to stay in the home, now it seems that both parties want to avoid being stuck with the mortgage. Dividing this debt between each side can be a huge issue in a divorce. If the home goes into foreclosure, it might lead to problems if each spouse is still listed on the mortgage. If a short-sale is necessary, it will be critical to know if the parties will be held responsible for the difference between the sale price and the remaining balance on the mortgage.
Car payments may also present concerning financial issues during a divorce. Much of this will depend upon how the loan was set up at the time of purchase. If both spouses signed the loan, this could mean that both parties may be responsible for the payments, even if this is an issue addressed in the divorce.
The reason for this is that the contract that was signed at the time of the purchase is considered to be the contract in effect. A divorce settlement is just a later document, and does not change the original terms.
Individuals who want to ensure that they are not responsible for auto loans will need to refinance the agreement in the name of the spouse who will be paying the bill. Failing to do this may result in the other party being forced to pay for the vehicle, and this can result in extreme financial hardship.
Credit card debt is another issue that frequently causes problems for spouses going into divorce. If the account is in both parties’ names, each spouse will be held responsible for the amount, even if only one of the spouses was running up the debt. It is important to close any joint accounts once you decide to get a divorce to prevent this from happening.
What to do if You are Having Financial Problems
Even if you take all the necessary steps and draft a divorce decree that makes each party responsible for debts, it may be impossible to avoid running into money problems. Failing to pay these debts can ruin your credit rating, which may make it difficult for you to get back on your feet after the divorce.
If you are having trouble paying your bills or are missing payments, speak to an experienced bankruptcy attorney in your area to discuss the options that may be available to you. Knowing the proper steps to take can help you find the best solutions for your particular situation.