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Most Michigan couples acquire debts during the course of their marriage. If the couple later divorces, that marital debt needs to be dealt with just as any other issue such as property division and custody. Ordinarily, each party agrees to assume certain aspects of the marital debts.
When one party assumes a joint debt, the other party may ask to be removed from that debt. In some cases, that could mean the party assuming the debt will need to refinance it in order to ensure the other party no longer has any responsibility for the debt. The divorce settlement could contain a provision requiring the refinancing to be completed within a specific amount of time, and what the consequences are if the refinancing does not occur within that time.
A settlement also needs to provide for the possibility that one party may not pay a debt he or she agreed to pay. If both parties’ names are on the debt, the creditor can look to the other party for payment. The creditor is not obligated to abide by the divorce settlement and the other party may end up paying the debt. The settlement can give either party the right to go back to court for an order requiring the other party to reimburse the party forced to pay the debt by the creditor.
When it comes to marital debt, each party has to make sure he or she is protected. Any number of things can prevent one party from being able to meet the financial obligations he or she agreed to take on in a Michigan divorce. This is the main reason that certain safeguards need to be put into place to protect the other party.
Source: The Huffington Post, What Your Divorce Attorney Won’t Tell You About Marital Debt, Cathy Meyer, March 2, 2014