Divorce & Debt: What Happens If Your Ex Doesn’t Pay?

We get specific about the debts that cause the biggest post-divorce surprises: joint credit cards, mortgages on a home one spouse keeps, and tax debt from joint filing. We explain why being “off title” is not the same as being “off the mortgage,” how late payments can follow you for years, and what usually has to happen to truly remove a spouse from liability: refinance, sale, or in limited cases a loan assumption. We also talk about why taxes can be uniquely stressful, including the risk of unknown balances that surface after the paperwork is signed.

From there, we shift to solutions and enforcement. We discuss how courts enforce only what is written in the final judgment, why do-it-yourself forms often miss critical enforcement terms, and how tools like indemnification clauses, clear deadlines, and attorney fee provisions can change the outcome if your ex does not comply. We also clear up a common misconception about bankruptcy: one spouse’s discharge may not protect the other spouse on joint debts, making timing and planning essential.

If you’re negotiating a divorce settlement or already worried about debt after divorce, listen closely, then subscribe, share this episode with someone who needs it, and leave us a review so more families can find clear guidance when it matters most.

If you would like to speak with one of our attorneys, please call (503) 227-0200 or visit our website at www.pacificcascadelegal.com

Disclaimer: Nothing in this communication is intended to provide legal advice or constitute an attorney-client relationship.

Steve Altishin 0:31
Hello, I'm Steve Altishin, Director of Client Partnerships of Pacific Cascade Legal, and today we have our founding attorney, Lewis Landerholm with us to talk about the pitfalls of a spouse being ordered to pay debts in a divorce. How are you doing, Lewis, today?

Lewis Landerholm 0:48
Yeah, I'm doing great. How are you, Steve?

Steve Altishin 0:50
I'm doing good. I this one's really interesting because everybody it feels like says, well, I want my spouse to pay the debt. And then they don't think about what's going to happen when your the court actually orders your spouse to pay the debt and what the pitfalls can be, what can arise if the spouse fails to pay.

Steve Altishin 1:12
So let's kind of start about, you know, what are some of those pitfalls on relying on your spouse, soon to be ex-spouse, to pay the marital debts?

Lewis Landerholm 1:22
Yeah, the biggest thing that I think people misunderstand uh when they're going through a divorce, the only parties to the case, for the most part, I mean, there are exceptions to the rule, but for the most part, the only parties to the case are the two litigants, the husband and wife. So what the court is ordering is the court is ordering one of the parties to service the debt. But the court doesn't have the power to tell the actual creditor, the person who holds the note and is owed the money, doesn't have the the court doesn't have the power to tell the creditor not to then enforce against the other spouse. So, like a prime example is say husband and wife have credit cards in both of their names. They're both card holders, they're both obligated to pay the card. The court could say, husband, you're ordered to pay the debt. The problem is that if husband doesn't pay the debt, the credit card company is still going to come after wife and husband at the same time to seek payment and ultimately collect on it. So the challenge is that if that happens and you're divorced at that point, but you end up paying a debt that the court ordered the other party to do, you have to then enforce and go through a whole court proceeding to try to get your money back. And that's the that's the biggest challenge with um having your spouse be ordered to pay a debt that your name is on.

Steve Altishin 3:09
It seems like you know, on a credit card there can at least be sort of an ending period, but mortgage would be really difficult because if someone takes a house says, okay, and I'll take the mortgage, that can go on for years.

Lewis Landerholm 3:28
Oh, absolutely. And yeah, houses are, you know, people people think, okay, yeah, this party, and and this happens a lot when people are handling their own divorces without representation, they'll just agree to have one party be awarded the house. Well, that can work, but there are many other things that you have to think about because the the the title is the easy part, and who's awarded the house is kind of the easy part. The hard part is okay, the spouse who's not awarded the property but is still on the mortgage has to get off the mortgage at some point. So if you know the spouse who's living in the home stops paying, that mortgage company is going to come after the other house, the other party, the other spouse to then pay for a house that they're not living in. And then that's going to affect credit, and that's going to then go down a path where maybe foreclosure has to happen, or maybe again you have to go back to court to enforce the agreement so that court can either order order it sold or order that the other spouse finance to get their name off the mortgage. So mortgages are super tricky. You want to make sure that you have a good representation as you're thinking through how to actually divide a house so that you know you don't end up into these problems of servicing the debt for your ex-husband or ex-wife living in the marital home that you no longer are living in. So a lot of people don't like that answer when they find out how it really works.

Steve Altishin 5:07
Yeah. Taxes are really weird too, aren't they? The IRS doesn't care again about whose debt it is, even if there's some sort of ways they can sort of get out of it, defraud it or something, but but taxes can be out there that you don't even know exist.

Lewis Landerholm 5:23
Yeah, I mean, if you file jointly, there's definitely the risk that the IRS could come after either party, and they yeah, they don't care who they're coming after. So it all it all flows back to the same analysis that if if you're both or if one person is obligated to pay, the other party is ordered to pay, they're only being ordered to make the actual payment. And so you have to be really careful with those type of agreements and those type of arrangements because they can turn ugly really quickly.

Steve Altishin 6:02
Can the court can the the final judgment order someone to remove their name or get their name, other spouse's name removed? And is that enforceable? I mean, is that something that that just happens because the judge says, okay, you're off the debt now?

Lewis Landerholm 6:24
Um, the court can order that the other spouse's name is removed, but again, they're only ordering the other party to do it. They're not telling the creditor that the creditor has to do it. So the obligation of the spouse who's supposed to remove the name is to get to the creditor and say, I have to remove this name. What do I need to do? Some creditors will just say, no, we're not going to remove their name. Other creditors, like mortgages, you know, typically your three ways of removing somebody's name is going to be, are going to be sell the house, refinance the house, or in certain circumstances and certain mortgage, mortgage companies, you can assume the loan, where then you would become the only one on the mortgage. But that's less common. And so that's why it's not an easy process to go through, because you have to qualify, the mortgage company has to allow you to do it. And then ultimately, most of the time in those types of arrangements, we have clauses that in the event that you can't refi or assume, then the house will be listed for sale. Because if you if you outside of the not paying the mortgage, especially on a house, if you're still obligated on a second home and you go to try to purchase your own home, typically you need a much higher uh down payment. And it's difficult, it's more difficult for you to be able to qualify to purchase a home post-divorce. So that's the other component of why people want their name off the mortgage and and why it's it's just it's an it's tricky if things aren't drafted correctly.

Steve Altishin 8:19
Can

Steve Altishin 8:20
you talk just a little bit about how you can enforce that that judgment that the that the judge orders? Is there are there different things you do? How long does it take? What does it how much does it cost to actually try to you know go through the process of getting your ex-fouse to do what they were ordered to do?

Lewis Landerholm 8:44
It depends on what the judgment actually says. So there's a couple different options depending on specifically what is being ordered, ordered. And that will kind of depend on who did the judgment. You know, a lot of times we see some of these problems come up when people didn't have attorneys and they're just checking the boxes on the state forms. Um, they're awarding a house to one party, but it doesn't have terms, it doesn't have additional clauses to enforce. So sometimes we use contempt and sometimes we use enforcement of the judgment. And it really depends on the facts of the case. A lot of times when we're drafting a judgment, we put in indemnification clauses and enforcement clauses within the judgment itself, which makes this part of the process easier. But when parties are handling the documents themselves, they don't necessarily know to do that. And so it really depends on what the language says because that's all the judge is going to look at. If we have to go before the court and say, judge, you need to remove this party's name off the mortgage. You know, sometimes the judgment is silent to all of that. And the judge says, I can't order that because it's not in the judgment properly. And so, you know, it it will just depend on what the language actually says, what the timeline, what they are supposed to do and failed to do. And so, you know, it's really important to talk to an attorney who has experience doing this because we want to make sure that we can do it the right way, because timelines can vary from three months to six to eight months, depending on which procedure we have to

Lewis Landerholm 10:35
use.

Steve Altishin 10:35
And your ex going bankrupt doesn't really help. I know a lot of people are saying, oh, he or she filed bankruptcy, so that debt's gonna win now I don't have to pay it. That's not necessarily true, is it?

Lewis Landerholm 10:49
Not if your name is on the same debt. So people also don't understand is that in most bankruptcies, that if one spouse discharges their obligation to pay, they're only discharging their obligation to pay. If it is a joint credit card, for example, then the spouse who filed bankruptcy will no longer have to pay, but the credit card company can still come after the other spouse who's obligated on it because they didn't file for bankruptcy. So again, that's a very important time and a very important trigger to talk to attorneys to just make sure that you understand the timing of bankruptcies, the timing of with the divorce, and how to plan for these debts so that you don't have a surprise once the divorce is finalized.

Steve Altishin 11:42
So, how do you help your clients mitigate this risk, especially if it seems like the other spouse may be, you know, kind of iffy on whether they really will pay?

Lewis Landerholm 11:54
Yeah, the best thing that we do is one, we get the full financial picture before we agree to a settlement, right? Because we want to, we want to just understand like what are the options. Two, we want those debts paid off before the divorce is finalized. So we will look to typically equalize out of say a house or equalize out of a, you know, maybe it's a refinance of a house that we that you know, additional money is pulled out so that it can pay off um any unsecured debt. Or maybe there's something that has to get sold to pay off unsecured debt. But we want to, the ideal situation is that those debts are uh paid off and handled before the divorce is finalized so that they're not hanging over people's heads.

Steve Altishin 12:40
Can you just go closed like a uh credit card? Uh just sort of preemptorily, even before the judges decided who's gonna have to pay for it?

Lewis Landerholm 12:53
It depends. So there's a couple things. Uh, we've done other videos on the statutory restraining order. You know, there's there's things that you have to be careful about when you just unilaterally go and do things. Uh, it's possible if you're the account holder and the other spouse is say just a uh card holder or uh that they're not like an authorized user. Every credit card company has different naming conventions for what those mean. So you just have to check with your card. But if you're in the middle of divorce, you want to check with your attorney to make sure that you're allowed to do what you're contemplating doing. Number one. Number two, you just have to check with the credit card company to determine what can and can't be done.

Steve Altishin 13:34
If let's say you have to go through all this, can you get new attorney fees for that? Or is that just something you just you can't get? And so just try not to avoid it happening.

Lewis Landerholm 13:44
It depends again, back to the language in the judgment. Um, they these are situations where it is easier to get attorney fees because if you're if one spouse is ordered to do something and they're failing to do it, then a judge looks at it like as you're just not complying with an order. So therefore, uh fees are more readily available in those particular situations. Also, in judgments that we draft, we put language in there that says that you know, in the event that you do have to enforce that you shall get fees. So it gives us a more affirmative route to getting fees. So, yes, it's it's definitely possible. Happens more frequently in these types of cases where you can actually get fees if one spouse is not complying.

Steve Altishin 14:30
Well, we just blew through our time. That was great information, Lewis. Thanks for sitting down to talk about not just the pitfalls of a spouse being ordered to pay, but even what you can do to remedy if it if it happens. And I think the biggest thing you talked about was getting the judgment right, getting it down correctly so you know what you can and can't do and what you're getting into.

Lewis Landerholm 14:54
Yeah, because ultimately the judge is only going to enforce what's written on that piece of paper. So you want to just make sure that it's very clear. It says actually what was supposed to happen. Um, and then we have a much much better shot of getting that remedy done in a in the fastest way possible.

Steve Altishin 15:16
Great. And so again, thanks for joining us today, Luz. You bet. And everyone, thanks for joining us today, also. If anyone has any further questions on today's topic, you can post it here. We can get you connected with one of our attorneys. And until next time, stay safe, stay happy, and be well.

Intro/Outro 15:34
This has been Modern Family Matters, a legal podcast focusing on providing real answers and direction for individuals and families. Our podcast is sponsored by Lander Home Family Law and Pacific Cascade Family Law, serving families in Oregon and Washington. If you are in need of legal counsel or have additional questions about a family law matter important to you, please visit our website at landerhomelaw.com or Pacific Cascade Family Law.com. You can also call our headquarters at 503-227-0200 to schedule a case evaluation with one of our seasoned attorneys. Modern Family Matters. Advocating for your better tomorrow and offering legal solutions important to the Modern Family.