1. Do we need to inform the court if we decide to divide property and debt while the divorce is pending?
When a divorce is filed, an asset freeze is placed on the couple’s assets, meaning that property owned jointly by the couple or by an individual spouse cannot be transferred or sold while the divorce is pending. A party that decides to transfer or sell off the property without permission from the other spouse or the divorce court can be held financially liable for these actions. Therefore, to remain compliant with the asset freeze property should only be transferred or sold when both parties agree to do so or when the court grants permission.
2. How do we handle a jointly held bank account during a divorce?
Since joint accounts will need to be liquidated once the divorce is finalized a divorcing couple will often choose to open their individual bank accounts once they separate. As a general rule, when dividing funds held in a joint bank account, the division should occur prior to filing the divorce or be split with guidance from each spouse’s counsel or the court. Under no circumstances should a party unilaterally go into a joint account and withdraw all the funds.
3. When one spouse leaves the marital home is her or she still responsible for the debt?
Yes, a person’s debt obligation on a mortgage note is not contingent on the person living in the home. Therefore, if one spouse moves out and the spouse who remains in the home stops paying the mortgage resulting in the house being foreclosed on, both parties will be liable for the outstanding mortgage balance.
4. Who makes payments on joint debt while the divorce is pending?
Since both parties will remain responsible for a debt obligation during a divorce, it is important to reach a preliminary agreement as to who will be responsible for these debt obligations while the divorce is pending. If the debt obligation is not being paid on while the divorce is pending the creditor may report the debt as delinquent on both spouse’s credit report or enforce the debt against both parties.
5. Can a court enter a preliminary order resolving property and debt issues while the case is pending?
Yes, a party may petition the court to enter what is known as a preliminary or interim order. A preliminary order can be entered by the judge to provide the ground rules regarding how property and debt issues will be managed while the case is pending. For example, a preliminary order can dictate that a spouse should be responsible for paying the mortgage or other credit accounts. A preliminary order may also state that the parties place the marital home on the real estate market so that the proceeds from the sale can be divided equitably.
6. What if my spouse refuses to pay on joint credit accounts during the divorce?
Unfortunately, this is a common occurrence and is the main reason many individual undergoing a divorce suffer damage to their credit score. If there is not a current order in place stating who should pay on joint debt obligations one should be obtained to stop any further damage. If an order directing payment is in place, the noncompliant party may be held in contempt and be ordered to pay to repair any damage done to your credit report.