I hear this one frequently and there is no simple, satisfying answer. First, some basics: Your creditors were not parties to your divorce action so they cannot be made to follow the final decree of divorce and only look to the spouse ordered to pay the debt. Creditors and debt collectors will generally go after whomever they think might actually pay regardless of what the decree says. When someone is ordered to do something, like pay a debt on another’s behalf, and they fail to do it, the remedy is usually an enforcement action or some sort of seizure of the asset involved. Generally, people cannot be jailed for failure to pay a debt unless they have the means and are willfully refusing to do so. Also, Texas has very generous homestead and exemption laws making debt collection very difficult. Keeping all that in mind, I’ll address some specific kinds of debt below:
- Unsecured Debts (Credit Cards) – There is very little recourse here. You will have to hire a lawyer to attempt to enforce the decree against your ex. If successful, attorney fees can be recovered, but if your ex cannot pay his credit card bill, attorney fees likely can’t be recovered either, even if they’re owed. The old adage, “you can’t get blood from a turnip” is very true and there are a lot of turnips in Texas. Because payment of unsecured debt is nearly impossible to enforce, you should never give up anything valuable in negotiation in exchange for the other spouses promise to pay unsecured debt, especially if that debt is in your name alone.
- Car Note – More commonly people are worried that their ex isn’t paying a car note. Having a repossession on your credit report is a serious hit and worth contacting a lawyer about. Still, the good options are few. When debt planning during a divorce, another old adage holds true, “an ounce of prevention is worth a pound of cure.” While the divorce is being drafted, a good lawyer can put provisions in place allowing for the repossession of a vehicle by the other debtor. That way you could simply surrender the car to the bank, or bring the payments current and sell it yourself. If that provision isn’t in place, your best recourse will be to tell the bank where the vehicle is sitting so they can go repossess before the deficiency gets too high. Without special language in the decree, the Court will not order the car surrendered and you will likely be facing a turnip again.
- Mortgage – In the current North Texas market, many houses have some equity. If your ex falls behind and the house is foreclosed, not only will your credit be devastated, but the equity could be lost to both parties. Again, good planning is most important here. A good decree will allow for the appointment of a receiver if one party fails to refinance the home as ordered. A receiver is a real estate agent, but one who has the authority to list, repair, sell a property, and deduct the costs from the proceeds of the sale, including attorney fees. Also, the party getting the house should offer a deed of trust to secure assumption to the other spouse, that way if they fail to pay the mortgage, the other spouse can ultimately get the house back and save it from the bank. If a receiver isn’t ordered, a good lawyer can often get an agreement to that effect through the pressure of litigation over real estate.
As you can see, the importance of good drafting and planning for debt after divorce cannot be overstated. Most people don’t understand the practical effect an order to pay debt really has on banks and litigants. Without good representation, debt often drags spouses back to court long after the divorce should have been completed.