“Divorce Doesn’t Mean Divorced from Joint Debt”

I have counseled many divorce attorneys not to use language in a divorce decree that says one party will hold the other harmless for any debt that is a joint obligation. The language is actually meaningless for a number of reasons.

First of all, the creditor hasn’t agreed, so those making this hold harmless agreement are making an agreement that truly don’t have the right. Any debt or debts that are a joint obligation is just that, a joint obligation and if there is default both parties owe the debt and a hold harmless agreement or not, the creditor has the right to come after both parties.

James was referred by a Realtor, he wanted to buy a listing that the agent had available. When I did the credit report, there were three defaulted credit cards and he immediately told me they were not his obligations, they belonged to his ex-wife. I immediately asked why they were on his credit report, sure enough he said that he had a hold harmless agreement and again reiterated, they were not his obligation.

These are not fun conversations to have, as his mid credit score was a 545. The bottom line, unless James takes over these obligations, his credit will get even worse. He was so upset, he told me that he was going to sue his attorney as he had no clue this was possible. Who knows what the real story is, but at least for now, he can’t buy a home.

I always recommend, whenever possible, keep credit card or installment debt separate.