Thursday, August 28, 2014

Family Lore Clinic: Can you include debts on a consent order?

Due to Google encrypted search stripping out keyword search information I don't get to know many of the questions people ask that lead them to Family Lore these days, and hence I don't do many of these Family Lore Clinic posts. However, here's one search term that recently slipped through Google's net: Can you include debts on a consent order?

The answer to this one is quite simple: yes, you can include debts in a consent order (as usual, I am using the term 'consent order' to mean the order setting out an agreed financial/property settlement following divorce or dissolution of civil partnership).

Unfortunately, it is all too common for there to be outstanding debts when a couple split up. Those debts may be in joint names or in the name of just one of the parties. They may have been incurred for the benefit of one party, or for the benefit of both parties. Clearly, who is to be responsible for payment of any such debt is a matter that needs to be resolved when the settlement is agreed.

If the debt is in one name and is to be paid by that party then this does not necessarily need to be specified in the order, although the paying party might want it to be recorded, especially if the other party is to retain any benefit from the money that was originally borrowed.

If the debt is in one name and is to be paid by both parties or the other party, then this should definitely be specified in the order, so that the debtor party can force the other party to pay.

Where the debt is in joint names, this does not necessarily mean that the creditor will expect each party to pay half. If the debt is unpaid, the creditor can seek the full amount from whichever party they think they are more likely to recover the debt from. It is therefore important that the consent order states who will pay what. If one party does not then pay, the other party can once again seek to enforce the order against them.

In short, debts are often mentioned in consent orders, usually as a recital, stating what the parties have agreed.

If you are unsure whether a debt should be included in a consent order, then you should seek the advice of an expert family lawyer.

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