Community Debt Division

Frequently during marriage, spouses incur debt or liability through a credit card, car note, home mortgage, home equity loan or other debt.  This community debt remains the responsibility of both spouses even after a divorce.  Although a final decree can spell out terms of assumed liability for both spouses, third-party creditors are not bound by these terms.  This is because the final decree in a divorce or agreement incident to divorce is treated as a contract, and as with typical contracts, all parties must be named and agree to the contract and be a party to that contract to be enforceable against that party. 

One common misconception between separate or divorcing parties is that if the debt was assumed by one spouse under an agreed divorce or decree, that, it absolves that non-assuming spouse from liability.  Creditors are not legally bound by said contract and can and do frequently go after either spouse for the unpaid debt or liability.  In cases of home mortgages, parties should cooperate to refinance the home so that the non-assuming spouse is completely absolved of liability from the home mortgage. 

Same goes for joint credit card debt.  It's best for parties to jointly close or cooperate with the closing or payoff of joint credit card debt before finalizing a divorce or separation.  Keep in mind that if the spouse who assumes the community debt or liability does not fulfill his or her end of the bargain, the remedy for the non-assuming party is to sue for breach of contract.  In some cases, a former spouse' credit score is ultimately affected if the debt goes into default.  Again, the remedy for the other spouse is to file an action against the other party for breach.