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How to Protect Yourself if Former Spouse Refuses to Pay Debts in Massachusetts

Credit Card.jpgAfter a divorce in Massachusetts, most people feel relieved and ready to move on with their lives. Unfortunately, in some instances the divorce decree is not the end of their dealings with their former spouse. Of course this is true for people who have children together but even former spouses that do not share children may be bound through their shared debts. While a property division as part of the divorce decree may assign marital debts to one party or the other, this assignment does not impact the agreement the spouses already made with the credit card company, mortgage company, or other financing institution to be jointly and severally liable for any remaining debt. This means the creditor could still come after the party that was not assigned a debt if the assigned party does not pay. There are a few ways to help reduce the chance that these liabilities will continue to wreak havoc on your life and your credit). This article discusses some of the most commonly used protections.

One option is to have spouses pay off jointly held debt as part of their divorce. The divorce decree can order that property be sold and proceeds from a sale go to paying off jointly held debt. If credit cards or other debts are paid off and closed, the party on the card, but not ordered to pay the debt, will not have to worry about whether a payment is made.

Another option is to refinance debt into one party's name. This type of protection is most commonly used on mortgages. One party will refinance the debt into only that party's name. For a while during the recession this was very difficult because many people did not have the requisite equity in their homes to refinance due to the depressed market. Fortunately, with the increase in housing prices former spouses are able to refinance and leave only one party on the hook for the mortgage. In most cases, the requirement of refinancing should be included in the divorce decree. A time limit for when the refinance must be accomplished should be included to ensure that the party required to refinance does not delay.
A third way to protect yourself from the other party's failure to pay a debt assigned to him/her is to have an indemnity provision. This provision allows the party not assigned to pay the debt to seek compensation from the party assigned to pay the debt if that party fails to pay. While this may offer some protection, it does very little if the assigned party disappears and cannot be found, or if so much damage has been done to the non-assigned party's credit that any redress will not adequately compensate.

If you are afraid that your former spouse will not pay the marital debt assigned to him/her as part of your divorce, it is important that you tell your family law attorney as soon as possible. Your family law attorney will likely use one of the options discussed or others to protect you from the nonpayment of your former spouse.

Should you be in the midst of a divorce or contemplating filing for divorce, contact the Law Offices of Renee Lazar either through email or telephone 978-844-4095 to schedule a FREE one hour no obligation consultation.

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