Can You Avoid Your Spouse's Debts In A Divorce?
Depending on your state's laws, assets and debts racked up during your marriage could be seen as both you and your spouse's. Unfortunately, if your spouse was responsible for a large share of the debt, you could still face the prospect of paying part of them. If you are thinking of filing for divorce, here are some options for protecting yourself from your spouse's debts.
Protect Your Assets
When your spouse's creditors are prepared to take legal action against your spouse, they might choose to go after both of your assets. One of the first steps you need to take is to protect your assets.
There are a few available methods for protecting your assets, including a post-nuptial agreement. A post-nuptial agreement helps to establish the boundaries for the division of assets in case you and your spouse do divorce.
You can also change the beneficiaries on your retirement plans, life insurance, and other payable-on-death accounts that you have. If possible, open up a separate bank account. Deposit your future earnings in that account to avoid commingling your finances.
Monitor Your Credit History and Freeze Your Credit
Your credit report will provide you with the most complete picture of what your spouse is doing that could have an impact on your finances. It is possible that your spouse has accounts open of which you are unaware.
Once you have obtained your report, sign up for a credit monitoring service. If there are any changes to your credit, you will receive alerts when they occur.
You also need to place a security freeze of your credit. A security freeze keeps lenders from accessing your credit history and score. As a result, your spouse will have a more difficult time of obtaining credit with your information.
File for Bankruptcy
If the debts are too overwhelming, file for bankruptcy. When you file for bankruptcy, you receive an automatic stay that keeps your spouse's creditors from going after you for the debts. If you file for a Chapter 7 bankruptcy, when the process is completed, your responsibility for the debts is over.
It is important to remember that some of your assets could be taken by the bankruptcy trustee to liquidate and pay the creditors. However, exemptions can enable you to keep control of most of your assets.
Work with a divorce attorney from a law firm like Grenadier, Starace, Duffett & Keisler, PC to find other ways to protect your assets and avoid your spouse's debts in the process.