DEBT AND DIVORCE - MINNESOTA

The Court has broad discretion in apportioning debt between spouses in adivorce proceeding.  The parties' respective incomes, the spouse's knowledge of the existence of the debt, and the purpose of the debt are all factors considered by the Court.   

For example, spouses A and B have accumulated $10,000.00 in credit card debt.  Both spouses approved the expenditure for a remodeling project in the home.  At the time of divorce, the Court will likely apportion fifty percent of the debt to each spouse. 

Another example finds spouse A accumulating $10,000.00 in credit card debt without the other spouse�s knowledge.  Spouse B did not benefit from this debt, and once it was discovered, spouse B objected.  The Court has the authority in apportioning 100% of the debt to spouse A. 

In apportioning debt, the Court does not have to consider in whose name the debt is attributed to.  For example, spouse A has a credit card in his name only.  Spouse B has never used the card, but was aware of its existence and has benefited from spouse A's use of this card during the marriage.  At the time of divorce, the Court apportions fifty percent of the debt to each spouse and a typical "hold harmless" clause is inserted into the divorce decree.  While spouse B may be ordered to pay on the debt by the Court, spouse A still has a contractual obligation with the credit card company to make sure all payments are made in a timely manner.  If spouse B fails to pay on this debt, spouse A will have to recover from spouse B through the Court that handled the divorce proceeding.  The credit card company will likely not absolve spouse A of any responsibility for payment on this card.  The risk here is simple: The credit card company is not a party to the divorce proceeding, and spouse A's credit may be adversely affected by spouse B's failure to abide by the Court order regarding debt repayment. 

In many situations, problems with spousal debt can be avoided.  For more information, call Christopher M. Banas at 952-746-2163. 

Christopher M. Banas is an attorney licensed in the State of Minnesota and concentrates his practice in family law.  In 2007 and 2008, he was named a Rising Star by Minnesota Law & Politics Magazine.  You can contact Christopher directly by calling his office at 952-746-2163 or by email at cbanas@hjlawfirm.com.   http://www.hjlawfirm.com