It is a common scenario when the court allocates community debts to your spouse in a divorce, and she, whether necessity or out of spite, does not payback. As a consequence, credit scores of both partners deteriorate. In some cases, she goes so far as to file bankruptcy. Whether she files for bankruptcy or simply refuses to pay because of financial crises, you want to understand, are you now liable for the debt?
LIABILITY OF COMMUNITY DEBTS
If you are facing community debts issues in Washington and wondering what ways to eliminate debts, the first thing you should know is that Washington is a community property state. Therefore, you may have to return your ex-wife’s debts even if you have no idea about it.
In community property states, debt or any assets generated during the marriage consider part of the marital community. Thus, courts in Washington assume a debt incurred from the date of marriage to the date of dissolution of marriage is a community debt that is to be distributed equally between the couple.
WHAT IF MY EX-WIFE DOES NOT PAY THE DEBTS THE COURT ORDERED HER TO PAY?
Both parties are bound to pay community debt. The debt division order by the court is between the court, you, and your ex only. Creditors are not under the burden to follow this order. If your wife fails to pay the debts after the court orders her to pay, the creditor can chase you.
For instance: Your friends Dora and Paul are opening a store. You lend them $500 for starting their business. Each signs an agreement, to be responsible for the payment of $500. Each friend alone should be liable for about $250.
After some time, Paul leaves the business. Dora states she will keep all the business’ debts and assets. Paul agrees. You ask Dora for the $500 she owes you but she refuses to pay. You ask Paul to return the $500. Paul says, “I am not bound for that payment. Dora and I agreed she would give the debt amount.”
An agreement you had no role in has now restricted your ability to get your $500! This is not fair. Both Dora and Paul agreed to reimburse you. You never consented to anything offbeat.
This depicts why the law does not alter the creditor’s claims when there is a separation. The decree of debt division holds some value. If your ex reluctant to pay, you can sue her for contempt and damages.
WHAT IF SHE FILES BANKRUPTCY?
Often times, a spouse who cannot pay her community debts file for bankruptcy. This sets their finances under the bankruptcy court’s authority. The court determines which debts to pay first, and which to drop. If the court removes a debt, a creditor has no ability to recover the debt.
If you will divorce, and your marital community has lots of debt, you can file for bankruptcy before filing for the dissolution of marriage. The bankruptcy can remove some of the debt and make it more relaxed to adjust the distribution of the rest.
You do not have to keep any real contact or live together with your spouse to file combined. It can be more inexpensive to file a joint bankruptcy instead of each of you filing individually.
If your partner files for bankruptcy after your separation, you will still be liable for community debts she cannot pay.
YOU DO HAVE MOVES TO FOLLOW
If you are married and live in Washington, you need to understand if your partner has liability for your debt.
Your judgment should state language that explicitly sets forth your partner’s responsibility to refinance or pay community debt which has your name on it and, furthermore, to not incur any more debt in your name. The judgment should also contain that you hold harmless from any of community debts and that if you are forced to pay any of these debts because of your spouse’s failure to pay, you possess the right to seek compensation via divorce court.
There are also other options to be explored in your situation to provide protection to ensure the amount of debt. If you are reading this long after or prior to the filling of your dissolution of marriage, you can protect yourself by working with a seasoned lawyer who comprehend the importance of protective language and how and where to include it in the divorce order.