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Divorce Debt

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Mark Cappel
UpdatedMay 16, 2024
Key Takeaways:
  • eep careful records of your costs regarding the garnishment. When the debt is resolved, consult with an attorney about filing a lawsuit against your ex-spouse to recover your costs resulting from him or her failing to perform under your divorce agreement

The judge gave my spouse our car in our divorce, which was later repo'ed. Now the creditor garnished my wages. What can I do?

I got a divorce in 2001 and the judge split our bills giving my (now ex-) spouse the car. In 2003 the car was repo'ed. Now in 2009 they are garnishing my wages. What can I do?

Your very brief message leaves many important facts open to deduction, assumption, and guesswork on my part. I also do not know your state of residence. Therefore, you should consult with an attorney in your state who has experience in family law or consumer law to learn your rights and liabilities.

I will deduce from your message that the car your (now ex-) spouse was given in the divorce settlement was financed and you were either the primary borrower or a co-signatory on the loan. It is also not a major leap of logic to conclude that along with being given custody of the vehicle your spouse was required to make the payments on the vehicle, which he or she did not. Apparently he or she did not refinance the vehicle loan, whereby he or she would have removed you as a signatory.

Divorce debt

A divorce decree does not trump the contract terms in a loan. The contract was agreed to when the loan was signed by you and your spouse. The divorce did not rewrite the contract. You may ask, "But doesn't the divorce decree trump the loan contract?" No, it does not. Unless a court actually enters into an agreement to change its terms, an existing agreement remains in effect regardless of a subsequent divorce decree. The divorce is a new agreement between the spouses regarding their financial responsibilities, but it is not binding on third parties.

It is unfortunate that your ex-spouse defaulted on the vehicle loan. As a (presumptive) co-signatory, you were responsible for making the payments when your ex-spouse defaulted regardless of your divorce. I would be surprised if you were not notified of the default. I would also be surprised if you were not notified by summons that you and your ex-spouse was sued by the creditor for a breach of contract. I would be equally surprised if you were not contacted by the judgment creditor following the hearing to negotiate a payment plan. If you are surprised by the garnishment order, then you were not adequately notified by the court and plaintiff. If this is so, contact an attorney in your state who is experienced in litigation to discuss your rights and options to vacate the judgment and resulting garnishment.

Your options are few if you were notified of the default and subsequent hearing and took no action. First, contact the creditor and open a negotiation to work out a lump-sum payment to settle the debt. The judgment-creditor is under no obligation to negotiate at this point, but may if you have a lump-sum to offer.

Keep careful records of your costs regarding the garnishment. When the debt is resolved, consult with an attorney about filing a lawsuit against your ex-spouse to recover your costs and damages resulting from him or her failing to perform under the terms of your divorce agreement.

To learn more about the rights of creditors and debtors, see the resource Collections Advice.

I hope this information helps you Find. Learn & Save.



Did you know?

If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2023 was $17.503 trillion. Student loan debt was $1.601 trillion and credit card debt was $1.129 trillion.

According to data gathered by from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

The amount of debt and debt in collections vary by state. For example, in California, 21% have any kind of debt in collections and the median debt in collections is $1824. Medical debt is common and 8% have that in collections. The median medical debt in collections is $712.

Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.



zzann, Dec, 2010
In a divorce i got to keep my vehicle--and made the payments--the loan is in the exs name which i could never inquire any information--but on payment stub realized the amount owed was not adding up and knew he had purchased his two kids a car--which made me think he put them on my loan and hoped i would never find out and end up paying for all the cars--well i caught him and took him back to court--and he agreed to make the payments on my car. the title is in my name--he died a week ago--and in good standing went in to the bank to see where it all stood--the bottom line is that they say i should make the payments and then take from his estate--i don't feel like that is fair and want to know what my legal rights are! thanks
BBill, Dec, 2010
You should speak with a local, licensed attorney, to fully understand your legal rights. Did your ex have a will? You should try to find out if your ex left any record of the recent agreement he made to make payments on your car. Speak with his probate attorney, if there is one.
BBill, Feb, 2010
If the debt in question was discharged completely, then the debt is gone, noncollectable, kaput, zip, zero, nada. If the debt in question was discharged completely then you have no liability for it. If so, do not pay a penny to the creditor. Doing so will reinstate the creditor's right to collect the debt. Therefore, do not pay anything on that account from now to eternity if was discharged completely. However, if the debt was discharged partially, then you have liability for the undischarged portion of the debt. Regarding your credit score, the damage is done. Your paying anything on the debt will have little if any affect on your credit score. Your credit score will recover as time passes, and with your keeping your other accounts current. One last thought: Unscrupulous customer service representatives at the creditor in question may contact you and say you would somehow help yourself or ex-spouse by paying the debt. If you have any temptation to believe them (which you should not) ask them to put in writing exactly how much your credit score will improve if you pay the debt. If they do, and you pay, and your score does not improve, guess what? You have a cause of action against the creditor for fraud.
WWill, Feb, 2010
My ex-wife filed for bankruptcy and included a debt that was jointly incurred while we were still married. The loan has not been paid on since she filed for bankruptcy nearly 5 months ago. Am I better off, credit wise, to contact the company and start making the payments, or should I do nothing with the debt since it was discharged with her bankruptcy?
BBill, Jan, 2010
There are 10 community property states, and the community property laws vary in each of those states. Your questions touch on community property law, remedies, corporations, and contract law, all of which vary by state. You need more help than can provide via e-mail or in Web-based questions-and-answers. You need individual help from an attorney in your state who can review all of the documents and details in your case. Contact your county bar association, and ask for the name of the organization in your area that provides legal aid to people with low or no income. Make an appointment with the pro bono part of that legal aid organization, and bring all of the documents you have regarding your divorce and your ex-husband's business to your meeting. The paralegal or attorney you meet with in person will be able to give you precise advice based on your circumstances and your state's laws.
CCindy, Jan, 2010
I was awarded community property on 1/5/2010 a business ex-husband started while married. How or what can i do not to be held liable for all the debts and liablities incurred. The business started 6/2008 we were seperated 9/2009. I'm in court now I can not afford an attorney please help me.