{"id":1383,"date":"2012-06-14T07:52:02","date_gmt":"2012-06-14T07:52:02","guid":{"rendered":"http:\/\/scoresbyfamilylaw.com\/blog\/?p=1383"},"modified":"2019-11-23T22:26:38","modified_gmt":"2019-11-24T05:26:38","slug":"divorce-decree-does-not-change-creditors-rights","status":"publish","type":"post","link":"https:\/\/scoresbyfamilylaw.com\/blog\/2012\/06\/14\/divorce-decree-does-not-change-creditors-rights\/","title":{"rendered":"Divorce Decree Does Not Change Creditors&#8217; Rights"},"content":{"rendered":"<p><a href=\"http:\/\/scoresbyfamilylaw.com\/blog\/wp-content\/uploads\/th.jpg\"><img decoding=\"async\" class=\"alignleft size-full wp-image-1392\" title=\"th\" alt=\"\" src=\"http:\/\/scoresbyfamilylaw.com\/blog\/wp-content\/uploads\/th.jpg\" width=\"300\" height=\"225\" \/><\/a>When a husband and wife divorce, their divorce decree typically specifies which marital debts each party is responsible to pay.\u00a0 The divorce judge has the authority to\u00a0order this division of debts <em>as\u00a0between the husband and the\u00a0wife<\/em>.\u00a0 As to creditors who are not parties to the divorce case, however, the allocation of debts in the divorce decree\u00a0is meaningless.\u00a0 The divorce decree does not prevent the creditors from pursuing collection of the marital debts from either or both parties, regardless of the orders contained in the decree.<!--more--><\/p>\n<p>Here is an example to illustrate this principle.\u00a0 During their marriage, Husband and Wife open a joint Visa credit card, a Mastercard, and an American Express Card.\u00a0 They also buy a vehicle together\u00a0on a loan from GMAC.\u00a0 At the time they divorce, they owe $6,000 on their Visa, $4,000 on their Mastercard, and $2,000 on their American Express.\u00a0 They owe $15,000 to GMAC on their vehicle, which is worth only about $12,000.\u00a0 The judge awards Husband the vehicle and the debt on it.\u00a0 The judge also orders\u00a0 Husband to pay the Visa.\u00a0 The judge orders Wife to pay the Mastercard and the American Express.<\/p>\n<p>After the divorce decree is entered, Wife diligently makes the monthly payments on the Mastercard and American Express.\u00a0 A year later, however, she starts receiving calls from GMAC and Visa.\u00a0 She finds that Husband defaulted on his vehicle loan and\u00a0that the vehicle was reposessed and sold at auction for $3,000 less than the debt owed.\u00a0 Including collection costs, interest\u00a0and late fees, $4,000 is now owed to GMAC, and\u00a0GMAC wants\u00a0to collect the money from her.\u00a0 \u00a0She finds that Husband never made\u00a0a payment on the Visa after the divorce and that with interest and late fees, $7,000 is now owed on the Visa.\u00a0 The Visa people also wish to collect from her.\u00a0 In total, the creditors are now coming after wife for $11,000 <em>on top<\/em> of the $6,000 she was ordered to pay in the divorce.<\/p>\n<p>Wife protests that she doesn&#8217;t owe GMAC or Visa anything &#8212; that Husband was ordered in the divorce to pay those debts.\u00a0 Is Wife&#8217;s argument valid?\u00a0 <strong>No.<\/strong>\u00a0 With\u00a0a few limited exceptions, debts incurred during a marriage are community debts.\u00a0 Such debts are owed to the creditors by both the husband and the wife.\u00a0 A creditor&#8217;s rights can only be affected by a lawsuit to which that creditor is a party.\u00a0 A divorce judge cannot adjudicate the rights of a creditor who is not a party to the divorce case.\u00a0 An allocation of debts in a divorce decree has no impact on creditors&#8217; contractual rights to pursue collection of unpaid debts.<\/p>\n<p>So in my example above, is Wife simply out of luck?\u00a0 Maybe.\u00a0 If Wife ends up paying Visa or GMAC anything on the debts Husband was supposed to pay, Wife can bring an enforcement action against Husband back in the family court.\u00a0 In short, Wife can sue Husband for the amounts she paid on the debts Husband was ordered to pay, and she will likely\u00a0be awarded a judgment against Husband.\u00a0 Obtaining a judgment and collecting on it, however,\u00a0are two different things entirely.\u00a0 If GMAC and Visa found it difficult to collect from Husband, Wife probably will too.<\/p>\n<p>The best\u00a0way and time to\u00a0deal with this issue is by settlement\u00a0<strong>before<\/strong> the divorce is finalized.\u00a0\u00a0 By negotiation, the parties may agree to\u00a0liquidate certain\u00a0assets and pay off joint debts.\u00a0 Another option is for each party, while the divorce is in process, to open new credit cards and to balance transfer 50% of the joint credit card debt (or other percentage as the parties agree) to each party&#8217;s separate credit cards.\u00a0 Neither party will be responsible later for any debt the other incurred<strong> after<\/strong> the divorce case was filed and served.\u00a0 Finally, the parties can agree to include debt\u00a0refinance requirements in their settlement papers.<\/p>\n<p>Copyright \u00a9 2012 by Scoresby Family Law \u2013 J. Kyle Scoresby, P.C. All rights reserved.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>When a husband and wife divorce, their divorce decree typically specifies which marital debts each [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":1392,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[117],"tags":[36],"class_list":["post-1383","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-post-decree-division-of-assets","tag-consent-decree-of-dissolution-of-marriage"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Divorce Decree Does Not Change Creditors&#039; Rights - Arizona Divorce &amp; Family Law Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/scoresbyfamilylaw.com\/blog\/2012\/06\/14\/divorce-decree-does-not-change-creditors-rights\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Divorce Decree Does Not Change Creditors&#039; 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