CDA CDA Debt Division & Credit Issues in Divorce

Question 1

In most U.S. states, which type of debt incurred during marriage is typically considered marital debt?

Accepted Answer

Debts incurred for marital benefit regardless of whose name is on the account

Answer

In most states, debt incurred for the benefit of the marriage during the marriage is considered marital debt regardless of whose name appears on the account.

Question 2

What is a 'hold harmless' or indemnification clause in a divorce decree related to debt?

Accepted Answer

An agreement where one spouse assumes a debt and protects the other from creditor claims

Answer

A hold harmless clause requires one spouse to assume a debt and indemnify the other if the creditor pursues them for payment.

Question 3

Why is a divorce decree's debt assignment NOT binding on third-party creditors?

Accepted Answer

Because the divorce decree is a contract only between the spouses and not binding on creditors

Answer

A divorce decree binds only the spouses; creditors are not parties to the divorce and retain the right to pursue either party on a joint account.

Question 4

When divorcing spouses have a joint mortgage but only one will keep the home, what is the recommended action for the departing spouse?

Accepted Answer

Refinance the mortgage solely into the keeping spouse's name to release the departing spouse from liability

Answer

Refinancing the mortgage in only the keeping spouse's name is the only way to fully release the departing spouse from ongoing mortgage liability.

Question 5

What happens to a joint credit card account when one spouse is ordered to pay it in the divorce decree but fails to do so?

Accepted Answer

The other spouse's credit may be damaged and the creditor may pursue them for repayment

Answer

If the assigned spouse fails to pay, the joint account creditor can pursue the other spouse and potentially damage their credit, since creditors are not bound by the divorce decree.

(CDA) Certified Divorce Advisor Practice Test

(CDA) Certified Divorce Advisor Practice Test

CDA CDA Debt Division & Credit Issues in Divorce