Seglund Gabe Pawlak & Groth, PLC

Conveniently located in Wixom and Bloomfield Hills

  • Main office

    28345 Beck Road Suite 301 Wixom, Michigan 48393
    Phone: 248.869.0030
  • satellite office

    (by appointment only)
    41000 Woodward Avenue
    Suite 350 East
    Bloomfield Hills, MI 48304

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Marital Debt Doesn’t End with Divorce

08.01.2015 by Law Firm of Seglund Gabe Pawlak & Groth in Bankruptcy, Divorce, Family Law

Make sure you understand your debt responsibilities before you file for divorce or you could be in for some not-so-pretty surprises.

During your divorce proceedings all assets will be divided, even your debt. But, after your divorce is signed by the judge a debtor does not care if your divorce papers state your ex is responsible for payments. If your name is on the contract you will be held responsible for those debts and failure to pay will impact your credit rating, among other things.

The simplest advice is to try to pay off as much debt as possible before your divorce. Then work with your lawyer to ensure that all debt is clearly outline, protective clauses are used, and that contract contain the name of the responsible party.

Know Your Debt

A credit report can help you get started outlining all outstanding debts. List out all account details including account numbers when determining who the responsible payer will be. If you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin) you can be held responsible for debt your spouse incurred without your knowledge. Full financial disclosure during settlement negotiations can help protect you against surprise debt obligations.

An Indemnity Clause can offer Protection

If you ex decides to not pay on debt that was agreed during settlement negotiations you have no power to make him or her pay unless you have an indemnity clause added to your divorce settlement negotiations. A properly worded indemnity clause can provide you with legal ground to take your ex back to court to pay you any money you ended up paying as a result of a loan going into default.

Refinance secured loans first

In your divorce settlement negotiations you need to insist that the responsible spouse have the home or auto loan refinanced into only his or her name. Adding language that specifies a consequence for not doing so is also helpful in ensuring that your ex follows through. For example, if your spouse remains in the family home and is responsible for refinancing the home within three months and fails to do so, the consequence is that the home will be put on the market and sold. This provides the necessary protection for the non-responsible party.

Seglund Gabe Pawlak & Groth, PLC

Our experienced attorneys are committed to providing our clients with the guidance and support that they need to resolve their legal issues. With over five decades of experience serving clients in Southeastern Michigan, the attorneys of Seglund Gabe Pawlak & Groth, PLC have the experience and resources to resolve your legal issues. Our expert bankruptcy attorneys are seasoned professionals that will help you successfully navigate this time in your life.

beck-business-centerSeglund Gabe Pawlak & Groth, PLC

28345 Beck Road, Suite 301

Wixom, MI 48393

Phone: (248) 869-0030

Fax: (248) 869-0039


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