In this blog, an Orange County family attorney addresses the issue of secured liability in divorce situations.
Joint Liability
Normally, when a married couple borrows funds for a large purchase, they do so together (jointly). In a divorce situation, an Orange County family lawyer will need to address the issue of which party is to be obligated for the purchase and the debt. The party relinquishing control of the item may still be liable for the debt incurred as it was a joint purchase.
The Issue With Lenders
Neither the court nor the Orange County family attorney can require a lender to release a debtor from his/her responsibility to make payments on a loan despite their ability to divide the marital estate. Even if lenders were inclined to remove the obligation from one or the other of the parties (they usually are not), there is no mandate forcing them to do so.
Refinancing the Debt
An Orange County family attorney may consider this as a possibility if one of the parties is in a position to do so successfully. Due to the impact of divorce on a couple’s financial status, it may not be feasible. Thus, if the party holding the item cannot pay off the debt, the other party may have to assume it (contingent liability).
Other Options
To help solve this issue, the Orange County family lawyer may recommend that the couple accept that contingent liability is probable and prepare themselves accordingly. If the spouse responsible for the debt fails to make the payment and the debt falls on the other party, then perhaps this risk may be factored in by providing compensatory assets to the other to meet the situation.
Be Aware of the Risks
If you are involved in a divorce, your Orange County family attorney has the skill and experience necessary to guide you through the procedures. Don’t hesitate to call Bethanie Fanti at 714-505-3108 today.