Dave Ramsey's Debt Myths - Divorce & Debt | Summary and Q&A

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February 14, 2018
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Consumer Warrior
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Dave Ramsey's Debt Myths - Divorce & Debt

TL;DR

Divorce decrees do not absolve individuals of debt responsibility, as creditors are not bound by the terms of the decree.

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Questions & Answers

Q: What is the misconception regarding debt responsibility and divorce?

The misconception is that if a spouse agrees to pay a debt in the divorce decree, the other spouse is no longer responsible for it, which is incorrect. Creditors are not bound by the terms of the decree and can still hold both parties liable for the debt.

Q: Can the non-responsible spouse seek reimbursement for paying the debt?

Yes, the non-responsible spouse can go to family court and request reimbursement from the responsible spouse for paying the debt. However, this process can be cumbersome and expensive, so many people choose not to pursue it.

Q: Does living in a community property state affect debt responsibility in divorce?

Yes, in community property states like Arizona, debts incurred during the marriage are generally considered joint, even if they are not in one's name. This means both spouses may be held liable for the debt, regardless of what is stated in the divorce decree.

Q: How should individuals deal with debt after divorce?

It is important to address the debt, whether through methods like Dave Ramsey's debt snowball or more extreme measures like bankruptcy. Ignoring the debt can lead to further problems and complications.

Summary & Key Takeaways

  • The podcast discusses the misconception that a divorce decree can relieve individuals of their debt responsibility.

  • Divorce decrees are essentially contracts between the parties involved, but creditors are not bound by them.

  • Even if a spouse agrees to pay a debt in the divorce decree, the other spouse may still be held liable for the debt by the creditor.

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