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725 - Managing Your Debts

When people divorce in the movies and on television, they fight over millions of dollars in marital wealth. You probably know by now, though, that reality is quite different. When people divorce in my office, they're more often struggling together to deal with debt ‑ lots of debt.

And there's no silver bullet. Unless you're both going to file bankruptcy, and that's rarely a good idea, you're going to be stuck with those debts. You and your spouse will need to think through the risks for both of you just as carefully as you can, and try to fashion a strategy that manages the risk as prudently as possible.

For starters, and this is a no‑brainer, you need to get rid of as much debt as you can. Perhaps you need to sell a vehicle or your home just to get your debts down to a level you can understand and control.

Second, realize that your spouse's commitment to pay a debt is binding only between you and your spouse. It's not at 'an binding on the lender, and if your spouse doesn't pay the debt, the lender can come looking for you. At that point, the lender will have little or no interest in what your spouse agreed with you to do. As far as the lender is concerned, you owe the money, and you still need to pay it.

The worst case scenario, of course, is the hapless victim who accepts less value in assets because his or her spouse has agreed to take on the debt. Then the spouse reneges on the payment, and you're stuck with no assets and the responsibility for the debt. You can take your spouse back to court, but if your spouse has no way to pay the debt, what can the judge do? For that reason, both spouses in divorce need to do everything they can to avoid having one spouse responsible for paying the debts of another.

Now, one more thought. If you're stuck having your spouse responsible for paying your debts ‑ and sometimes you just get stuck there ‑ see if your spouse won't agree to reserve alimony pending the full payment. That way, if your spouse doesn't come through, you'll at least give the judge one more tool for enforcement.

Alabama Family Law Center serves clients who need to get through divorce and who are able to be reasonably cooperative. The goal is for both spouses to survive divorce and move on with their lives with some money in their pockets and their dignity intact.

No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers.

If you'd like to make an appointment with me, call 205-979-6960. Or you can click here to return to the Divorce Line.