Division of Debts in Divorce

As always. Please don’t take this as legal advice or opinion. I am not an attorney, nor do I work for an attorney. If you need to discuss the specifics of your case please seek the advice of an experienced family law attorney.

So a person is heading into a divorce and they have some debt that needs dividing up. This post is about some of the very serious and long term issues that can pop up if they're not careful.

Once the divorce papers are filed there's a document called a "Credit Notice" with the divorce papers. This Notice is required to be included in the divorce per Arizona Law (A.R.S. 25-318).

The problem is that it seems like a lot of people don't have a good understanding of what the Credit Notice means. The Notice reads in part:

In your property settlement agreement or decree of dissolution or legal separation, the court may assign responsibility for certain community debts to one spouse or the other. Please be aware that a court order that does this is binding on the spouses only and does not necessarily relieve either of you from your responsibility for these community debts. These debts are matters of contract between both of you and your creditors (such as banks, credit unions, credit card issuers, finance companies, utility companies, medical providers and retailers).

Since your creditors are not parties to this court case, they are not bound by court orders or any agreements you and your spouse reach in this case. On request, the court may impose a lien against the separate property of a spouse to secure payment of debts that the court orders that spouse to pay.

You may want to contact your creditors to discuss your debts as well as the possible effects of your court case on your debts. To assist you in identifying your creditors, you may obtain a copy of your spouse's credit report by making a written request to the court for an order requiring a credit reporting agency to release the report to you. Within thirty days after receipt of a request from a spouse who is party to a dissolution of marriage or legal separation action, which includes the court and case number of the action, creditors are required by law to provide information as to the balance and account status of any debts for which the requesting spouse may be liable to the creditor.

What this means is that the judge in the divorce case:

MAY and WILL make orders telling the husband and wife to do certain things, pay certain bills, or meet certain financial obligations.

BUT

CANNOT and WILL NOT make orders telling their creditors what to do such as refinance a debt, remove a name from an account, or release someone from a liability.

So who or what is a creditor? Simple, anyone you or your spouse owe money to. This includes things like your mortgage company, the company that finances your car, your credit card company, your landlord, your utility company, the IRS, and your spouse's sister that loaned you guys $1,000 last year.

Let's take an example:

A couple is getting a divorce and they have three debts:

The first is a credit card with $5,000 owing on it. Only the husband is listed on the account.

The second is a new 30 year home mortgage with $180,000 owing on it. Both the husband and wife are listed on the mortgage.

The third is the wife's school loan with $20,000 owing on it. Only the wife is listed on the loan.

Now this couple has sat down and agreed that they want a divorce. They've discussed and agreed on how they want things divided and eventually present the following agreement to the judge:

That the husband will be assigned the $5,000 in credit card debt and that he will be 100% responsible for it.

That the husband will keep the home. He will also be assigned the $180,000 mortgage debt and that he will be 100% responsible for it.

That the wife will be assigned the $20,000 in student loan debt and that she will be 100% responsible for it.

The judge agrees and signs off on their agreement in their divorce. Seems simple right? Not so fast...

Now the husband is under court order to pay that mortgage and he has to do it. However the problem arises when the wife tries to buy another home or applies for more credit and is denied. She is denied because she still shows that she is owing on a 30 year, $180,000 home mortgage.

The wife goes to the bank holding the mortgage and shows them the divorce decree showing that the judge ordered that she was no longer responsible. The bank officer then regretfully informs her that the bank will not remove her name from the mortgage. Why?

The Court CANNOT and WILL NOT make orders telling creditors (i.e. the bank) what to do such as refinance a debt, remove a name from an account, or release someone from a liability (i.e. remove the wife from the mortgage).

She will still have that 30 year mortgage hanging over her head until the bank decides that they want to refinance her name off of the account, and they often won't. After all, they'd rather have two people owing them money and not just one.

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www.dawsondocuments.com

Legal Custody, Decision-Making, Parenting Time and Visitation

A Note on Terms. Some people use the term “legal custody”. However, Arizona courts generally do not use this terminology anymore, but instead use the term “legal decision-making”. The same thing with “visitation”, the courts generally use the term “parenting time” and "visitation" means something altogether different.

Legal Custody = Legal Decision-Making

Visitation = Parenting Time

And One More Note. Please don’t take this as legal advice or opinion. I am not an attorney, nor do I work for an attorney. This is my personal take on and understanding of these issues. If you need to discuss the specifics of your case please seek the advice of an experienced family law attorney.

So what exactly is legal decision-making? Legal decision-making is simply who has input and power over the major decisions that affect the child. These are things such as whether the child gets braces or where the child goes to school. Legal decision-making has nothing to do with who physically has the child or how much time each parent spends with the child.

There are two ways that legal decision-making can be ordered:

Joint Legal Decision-Making – this simply means that both parents share in the decision-making in regards to the child, and neither parent has greater authority than the other. What this boils down to is that both parents must agree on all major decisions. If they can’t it probably means another trip to court to resolve the issue. An example:

Mother wants the child to get braces, but father disagrees. The parents share joint legal decision-making, so in this situation the mother cannot just go ahead and get the child braces without father’s permission.

Sole Legal Decision-Making – this simply means that the parent with sole legal decision-making can make major decisions regarding the child even without the other parent’s agreement. To continue our example above:

Mother wants the child to get braces, but father disagrees. Mother has sole legal decision-making, so in this situation the mother can go ahead and get the child braces even though the father objects.

And what exactly is parenting time? Parenting time is pretty much how it sounds. It is the schedule that determines which parent has the child and when.

Tied in with parenting time is the concept of who is the “primary residential parent”. The primary residential parent is simply the parent who the child spends the majority of the time with.

Broadly speaking, there are three ways that parenting time can be ordered:

Mother as the primary residential parent, with father having some form of parenting time – The child’s mother has the child 51% of the time or more, and the child’s father has some form of parenting time schedule outlining what time he has with the child. An example:

“Mother is named as the child’s primary residential parent subject to father’s parenting time as follows: Father will have parenting time with the child on alternating weekends from 7 p.m. Friday evening until 7 p.m. the following Sunday evening. Mother will have the child in her care at all other times.”

Father as the primary residential parent, with mother having some form of parenting time – The child’s father has the child 51% of the time or more, and the child’s mother has some form of parenting time/visitation schedule outlining what time she has with the child. An example:

“Father is named as the child’s primary residential parent subject to mother’s parenting time as follows: Mother will have parenting time with the child on alternating weekends from 7 p.m. Friday evening until 7 p.m. the following Sunday evening. Father will have the child in his care at all other times.”

Equal physical custody, with neither parent named as the primary residential parent – The child’s parents each have the child exactly 50% of the time, and neither parent has the child more than the other. There will be some form of parenting time/visitation schedule outlining which parent has the child during which times. An example:

“Parents will share equal physical custody of the child, with neither parent acting as the primary residential parent. In the absence of other agreement, parents shall share parenting time in alternating one week blocks (i.e. mother will have the child for one week, and then father shall have the child the next week; this pattern will then continue). Pick up and drop off of the child shall occur on Friday nights at 7 p.m.”

So where does that leave us? Just as legal decision-making has nothing to do with parenting time, parenting time has nothing to do with decision-making. They are separate, but they are both part of a court’s custody order. Given the above, we are left with the following possible types of custody order:

Joint Legal Decision-Making with Mother named as the Primary Residential Parent – the parents have to agree on all major decisions related to their child. The child will be spending more than half the time with mother, and father will have some form of parenting time/visitation.

Joint Legal Decision-Making with Father named as the Primary Residential Parent - the parents have to agree on all major decisions related to their child. The child will be spending more than half the time with father, and mother will have some form of parenting time/visitation.

Joint Legal Decision-Making with parents sharing Equal Physical Custody - the parents have to agree on all major decisions related to their child. The child will be spending an equal amount of time between the parents’ homes, and there will be some form of parenting time schedule outlining who has the child and when.

Sole Legal Decision Making to the Mother with Mother named as the Primary Residential Parent – mother has final say on all major decisions related to their child (typically after reasonable consultation with father). The child will be spending more than half the time with mother, and father will have some form of parenting time/visitation.

Sole Legal Decision Making to the Mother with Father named as the Primary Residential Parent - mother has final say on all major decisions related to their child (typically after reasonable consultation with father). The child will be spending more than half the time with father, and mother will have some form of parenting time/visitation. I have never seen this arrangement in the ten years I have been doing custody cases and doubt I ever will.

Sole Legal Decision Making to the Mother with parents sharing Equal Physical Custody - mother has final say on all major decisions related to their child (typically after reasonable consultation with father). The child will be spending an equal amount of time between the parents’ homes, and there will be some form of parenting time schedule outlining who has the child and when.

Sole Legal Decision Making to the Father with Mother named as the Primary Residential Parent - father has final say on all major decisions related to their child (typically after reasonable consultation with mother). The child will be spending more than half the time with mother, and father will have some form of parenting time/visitation. I have never seen this arrangement in the ten years I have been doing custody cases and doubt I ever will.

Sole Legal Decision Making to the Father with Father named as the Primary Residential Parent - father has final say on all major decisions related to their child (typically after reasonable consultation with mother). The child will be spending more than half the time with father, and mother will have some form of parenting time/visitation.

Sole Legal Decision Making to the Father with parents sharing Equal Physical Custody - father has final say on all major decisions related to their child (typically after reasonable consultation with mother). The child will be spending an equal amount of time between the parents’ homes, and there will be some form of parenting time schedule outlining who has the child and when.

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www.dawsondocuments.com

Three Questions to Ask

So you have had a consultation with an attorney, you have identified your issues, and now you’re ready to hire a non-attorney to prepare your legal documents. What are the questions you should ask before hiring someone?

Is this person a court certified legal document preparer?

Anyone who charges you money to prepare your legal matter must either be a licensed attorney or court certified legal document preparer. In addition, they must put their name and certification number on all of your legal documents. If they do not, they are probably hiding something; more than likely the fact that they are preparing your documents illegally.

What is their price, and is it clearly stated in writing?

It is extremely important to understand what you will be charged, and that these fees are clearly stated and in writing. In addition, you should understand what other costs are involved in your case such as court filing fees and third party service costs as these can often be quite high. Imagine the following:

You find someone who says they will do your uncontested divorce for $200. You give them the money and they prepare your initial papers. You think to yourself, “Great, I can afford this!”

When you go file your case you find out that the clerk of the court is going to charge you $350 to open your case.

You go back to the document preparer’s office and they charge you another $100 for giving it to a ‘guy they know’ who will serve the documents on your spouse. By this time your bank account is beginning to look positively empty, but you push on.

Twenty days later you go to the document preparer to have them prepare your default application and final orders. The document preparer smiles and says, “Excellent, that will only be another $500.”

What you initially thought was only going to cost your $200 eventually ended up costing you $1,150.

Do they over promise or guarantee success?

The cold, hard fact is that there are no guarantees in a legal case (especially in a family law case). Anyone who claims to know the outcome beforehand is either lying or does not really know what they are talking about. That may sound harsh, but it’s true. An experienced attorney may have a good guess on how a case will turn out, but even the best attorney only deals in probabilities.

A legal document preparer who guarantees that they will get you sole custody of the kids, or a certain amount of alimony, etc., is at best not dealing with you honestly, and at worst is probably engaged in the unauthorized practice of law.

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www.dawsondocuments.com