Co-Signer Obligations After Divorce

Does Divorce Dissolve a Co-Signer's Obligations

My ex-husband's business (which I have never been an employee or officer of) had a line of credit that I personally co-signed for several years ago (when we were still married).

He also personally signed and is now talking about filing bankruptcy business and personal.

The debt was listed in our divorce agreement as his.

Will I be responsible for this debt?

How long do I have to be divorced before I am no longer responsible for his debt?

State of Kentucky

As a co-signer, you are as responsible for the loan as your ex-husband is. Since this is a business debt, there is little you can do to protect yourself.

The basic reason for requiring a co-signer in the first place is to protect the lender. In many cases, credit would not be extended but for the co-signer's credit rating.

If something goes wrong, the lender also has created the right to collect from the co-signer unless prevented by law.

When the divorce decree assigned the debt to your husband, it was a means of settling the martial assets and debts. I doubt that the divorce judge did anything that affected your obligations as co-signer.

It was up to you or your attorney to make sure the divorce decree was enforced. In your case it would have meant your husband either refinancing the debt in his own name or getting the creditor to relieve you as co-signer.

It doesn't matter how long you are divorced. If the debt is unpaid, your obligation is ongoing.

I would talk to the lawyer that represented you in the divorce to get a thorough explanation of your obligations if your husband fails to comply with the decree and whether there is any protection from the lender you can obtain now. He should be willing to help since he might have committed legal malpractice.

If you didn't have a lawyer, now is the time to find a good one.

If the debt is large enough, you might have to file for bankruptcy yourself, unless the lawyer is able to work out a settlement or renegotiate the debt for you.

I never practiced law in Kentucky and I haven't read your divorce decree, but it looks like you might be in a bad position right now.