Debt and Divorce – What you need to know about Equitable Division (part 2)

How does the Michigan Family Court deal with your debt during a divorce?

 

In the previous segment in this two part series on debt and divorce, we talked about equitable division of debt during a divorce, and what that means for couples in Michigan. Moving on, we are going to look at what happens when the court has divided your marital debt, but the spouse it is assigned to cannot, or will not, pay for their share.

 

Once the Judge has assigned the accrued marital debt to each of the divorcing parties, this division is considered legally binding. This means that legally, you cannot just decide that you don’t feel like paying what was assigned to you by the court. However, there are situations where one party loses their job and so cannot continue to pay for the debt that the court assigned them.

 

So what do you do when this happens to you? What are your options when your ex suddenly stops paying on an old credit card bill that the court assigned them during the divorce? Or worse, the mortgage for the house that you are currently living in. Well, you have options…

 

First, you can choose to ignore it. However, while this debt may not legally be your responsibility anymore, that doesn’t mean that the creditors aren’t going to try and get their money back in whatever way they are able. A judge doesn’t have authority over your creditors, and so even if debt has been assigned to your ex, a creditor may continue to treat debts that are in both of your names as joint debt, which may negatively impact your credit.

 

Second, you can opt to pay the debt and keep proof that you paid it. Then you would notify the family court of the fact that you have paid a debt assigned to your ex and file a motion asking the court to order your spouse to reimburse you.

 

There are several options for people whose spouses refuse to pay.

 

Finally, you can petition the court to enforce the divorce agreement. Your spouse will then be legally required to appear in court and explain to the judge why the order is not being followed. Depending on the answers and validation provided, your ex could be punished with fines or jail time.

 

On occasion, the debts can be so financially crippling that one or both parties are forced to file for bankruptcy. It is important to know, however, that while filing for bankruptcy might reduce or even completely remove much of your debt, it will not affect debts like child support and alimony payments. Court ordered family support will always maintain priority in bankruptcy judgments.

 

Debts can complicate a divorce. The more debt, the more complicated the process. The best advice that we could give you, regardless of the state of your marriage, is to deal with your debt as quickly and responsibly as you are financially able to. That way, regardless of whether your marriage weathers the years or not, you aren’t left crippled by financial woes for the rest of your life.

 

Regardless of your financial situation, however, if you or a loved one are considering divorce and you need help with asset division, child custody, alimony, or any other aspect of the divorce process, we are here to help. Our experienced family law attorneys have been helping people all over mid-Michigan with their family law needs for decades. We can help you too.

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