Posts Tagged ‘Debt’

Some Financial Effects of Divorce

Tuesday, May 1st, 2012

When two people are dating, they often decide to move in together for a number of reasons, and one of those reasons can be financial.  After all, why pay for two sets of living expenses (rent, electric, cable etc.) when you are spending all of your time together?  It is cheaper to combine expenses.

The opposite happens when people get divorced, but for some reason it seems to come as a surprise to people that they are not able to continue to maintain the same lifestyle that they had as a couple.

Often, the couple’s financial difficulties are one of the reasons they got into marital problems in the first place, and now that same combined income needs to pay for two separate households.

Everyone seems to understand that the ‘stuff’ to be divided at the time of a divorce includes the house, the cars, the televisions and the other tangible items.  What they often don’t understand is that debts are also considered marital ‘stuff’ that will be divided.  Debts are contracts made between parties where one side (the creditor) agrees to provide something (money) in exchange for the other side’s agreement to pay the creditor back, usually with interest.

Most of the time, the divorce will assign the debt to the person who signed this debt contract as the ‘responsible party’ for the debt.  For example, if Bob gets a credit card in his name alone, he is the ‘responsible party’ for that debt and he will probably be assigned that debt in the divorce.

If the debt is in both of their names, the divorce may assign the debt to one party, but the contract with the creditor has never been changed.  What this means is that the creditor can still file a lawsuit against both Husband and Wife to try to get repayment of the debt.

As an example, Bob and Carol were married when they applied for a credit card to cover the cost of furniture for their home and they both signed the credit card contract.  Now, Bob and Carol are divorced and that debt has been assigned by the divorce to Bob.  Bob does not make the payments on the credit card and the credit card company sues both Bob and his ex-wife Carol for repayment.  Carol will need to defend herself against that lawsuit in court so that the court can order that Carol is not to be held responsible for this particular debt.  Carol can do this herself, but she will probably hire an attorney to assist her.  If the divorce decree is worded correctly, Carol can then file suit against Bob to have him reimburse her for her legal fees.

There are also times when one or both of the parties files for protection under the Bankruptcy Code.  Again, a careful drafting of the divorce decree can help protect the other party from being held responsible for a debt that has been discharged by the other ex-spouse.

Divorce is an emotional and difficult process that can have immense and varied financial implications that should be discussed with an attorney who can help provide you the assistance and protection you need.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at

Someone owes me money, how do I get it? Part 2 – the Trial

Saturday, April 7th, 2012

We have all seen TV shows and movies where there is a trial with the Judge, the attorneys, the jury and the court reporter.  In Virginia, the only required people are the Judge, the person bringing the charges and the person answering the charges.  If the case is being heard in the District Court there is not even a place for a jury to sit, and the parties are often standing right in front of the Judge.

In a criminal trial, the person bringing the charges is either the prosecutor or the police officer.  In other words, the ‘state’.  In a civil trial, the person bringing the charges is called a ‘plaintiff’ and if somebody owes you money, you would be the ‘plaintiff’.

The person who is answering the charges is called the ‘defendant’ whether it is a criminal or civil case.  In our example, that would be the person who owes you the money.

The Judge is the person who makes the decision, and he or she makes that decision based on the facts of the case as they are presented at the trial, and how those facts fit into the existing laws.

In the case of the Warrant in Debt that was discussed in Part 1, you have probably already presented the ‘Bill of Particulars’ which tells the defendant why you think they owe you money, and the defendant has probably already provided the ‘Grounds of Defense’ which tells you why they think they don’t owe you the money.  These documents give the Judge the outline of the case, but you still need to provide evidence so the Judge can make a decision.

The evidence can be documents, things, or testimony of people that have knowledge of the facts of the case.  There are special rules which control what evidence can be admitted for the Judge to review.

Even if you are not an attorney, you are going to be bound by the rules of evidence when you are in a trial.  This is another reason why it is sometimes helpful to have an attorney instead of representing yourself.  The main things to remember are that the evidence needs to be relevant and truthful.

If the evidence is testimony of a person, that person will need to raise his or her right hand and swear or affirm that the testimony they will give is the truth.  If the person gives untruthful testimony while under oath, they can be found guilty of perjury, which is a criminal offense all by itself.

Oral testimony is usually given as a series of questions and answers.  Remember that there is no arguing!  If you think the person is not telling the truth, you can ask another question or ask the same question in a different manner, but you cannot get into a shouting match like you did when you were a kid.

Also, remember that a person can only provide evidence about what he or she saw, heard, or said themselves.  They cannot testify that ‘Susie told me…’ because that is called ‘hearsay’ and the judge can’t use that as evidence when making the decision.

If the evidence is a ‘thing’ you will need to first prove that the ‘thing’ is what you say it is before it can be introduced.  This is called ‘laying the foundation’.  For example, if I wanted to introduce a copy of the contract, I would first ask ‘I’m showing you a document.  Is this the contract that was signed by you and the defendant’?

Each side gets a chance to put forth their evidence and then the Judge will allow each side to make a statement about why they think they should win.  Then the Judge makes the decision.

In Virginia, you have 10 days in which to appeal any decision by a District Court Judge.   If either side notes an appeal, the whole trial will be done over again in the Circuit Court before a different Judge.  You don’t need to present exactly the same evidence at the appeal trial, but a lot of the evidence will be the same.  You might also change your tactic a little based on what the other side did in the District Court trial.

In our example, if the Judge decides that the person does owe you the money, and there was no appeal, you will now have a ‘judgment’.  You won!  But the judgment is really just a piece of paper saying that the other person owes you some money.  You can’t usually take this piece of paper to the gas station or the grocery store to buy things.  Actually getting the money can take some additional steps.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at

Someone owes me money, how do I get it? Part 1 – Warrant in Debt

Sunday, April 1st, 2012

A number of people call me when someone owes them money and they don’t know how to get paid.

If the amount of the total debt is under $25,000 I suggest that people go to the General District Court and file a ‘Warrant in Debt’.  This is how you start the process in Virginia.  The ‘Warrant in Debt’ is a form that lists the person who owes you the debt, the reason they owe the debt, and the amount of the debt.  There is a fee for the filing of this form with the court, and there is a fee to have the form given to the alleged debtor by a Sheriff.  You can also use a private process server, but in Virginia having the document served by the Sheriff is less expensive.

And yes, you can add the cost of the fees for the ‘Warrant in Debt’ to the total amount owed.

The ‘Warrant in Debt’ needs to be served on the person who owes you the money and you and the debtor must show up in court on the designated ‘return date’.  At the hearing on the ‘return date’, the judge will ask the debtor if he/she agrees that they owe the money.  If they say ‘yes’ the judge will enter a judgment for that amount and you now have a legal piece of paper saying they owe you the money.

If they dispute the claim for the money, the judge will set a date for a trial where you need to prove how much is owed and why.  They will, of course, try to prove that they don’t owe the money.  This trial is in front of the judge and after hearing all of the evidence and testimony from both sides, the judge will make a decision as to whether or not they money is actually owed.

If the debtor does not show up at the hearing, you can ask the judge to enter a ‘judgment’ for the amount you had entered on the form.

If you don’t show up for the hearing, the judge will generally dismiss your case.

Usually, if the debtor shows up at the hearing and disputes the amount, he/she will ask for ‘pleadings’ which include the ‘Bill of Particulars’ that you will need to provide to the debtor with a copy to the court, and a ‘Grounds of Defense’ which will be provided by the debtor to you and to the court.  The judge will give you due dates for these documents and you will need to make sure that these documents are received on time or your case can be dismissed.

There are parts of this process that you may be able to do yourself.  You can read about why you may need a lawyer here.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at

Who pays the debts when someone dies?

Monday, February 13th, 2012

This has come up twice in the past week.

In one instance someone asked me if they could file an ‘estate bankruptcy’ because the person who died had a lot of debt and there was not enough money to pay all of the outstanding bills.  In another instance someone said that they knew that the children were responsible for their parent’s bills when they died.

Bankruptcy is only available for living beings or businesses.  An estate can’t file for Bankruptcy.  If there isn’t enough money to  pay all of the debts, the estate is just considered ‘insolvent’.

If you are the executor or administrator of an insolvent estate, you are not automatically personally responsible for the payment of all of the debts, but you should make sure that you know the order in which to pay any of the debts because if you pay them in the wrong order you might be held personally responsible for the wrongful payment amount.

If you are not the executor or administrator of the insolvent estate, and you haven’t signed something saying that you have accepted responsibility for a parent’s debt, it is not your debt and you do not have to pay.  Remember this when someone puts a paper in front of you to sign that you will accept responsibility to pay.

In fact, if you are not the executor or administrator of an estate, you don’t need to do anything at all.

You are not automatically responsible for your parent’s outstanding debts when they die just because you are the child.

Of course, if there are any assets in the estate, those assets should be used first to pay any bills and the heirs will only receive what is left.  If there isn’t enough to pay all of the debt, there won’t be any left for the heirs.

So what happens to that unpaid debt?  It just doesn’t get paid at all.  It is usually just ‘charged off’ by the debtor as uncollectible.

If you are worried that you might have to pay someone else’s debts after they have died, you might want to consider talking to a probate attorney or the official who handles probate matters where the person died.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at