Does a Divorce Decree Absolve You From Liability for Marital Debts?

Suppose you have marital property secured by collateral—a house, boat or car, for instance—and you go through a divorce. During the proceedings, you negotiate a property settlement whereby your ex gets one of those items—the house, let’s say—and there’s still a mortgage on it. Suppose your ex has a really good job and pays the mortgage in a timely manner every month for the next 10 years, but then hits a rough financial period. If your ex falls behind on mortgage payments, can the lender come to you seeking payment? If there’s a foreclosure action, will you be named as well? The answer depends.
The first and most important thing to remember about a divorce order or decree is that it is only between you and your ex. It has no binding effect on any third party, including a lender. So, if the divorce decree was entered, but your ex never refinanced the house, and your name is still on the note, you are still liable. If payments are not made on time, the lender can call you, and can report any late payments to a credit reporting agency, where it will have a negative impact on you.
The lesson here—don’t agree to give any secured property to your ex unless he or she qualifies to refinance it in his or her name. Have it written into your divorce decree that your ex will refinance and follow up to make certain it happens. Otherwise, it can come back to haunt you.