An article about annulment caught our attention recently, and not just because it talked about the small group of celebrities, including Janet Jackson and Kim Kardashian (if her husband gets his way), who have had marriages annulled. It gives us the opportunity to discuss the differences between annulment and divorce.
In our last post, we discussed the grounds for annulment here in Illinois. Here, we will talk about the financial aspects of annulment.
The parties retain the assets and the debts they brought to the marriage in an annulment. What they came in with they walk out with. Any debt acquired during the marriage, though, belongs to both of them.
One of the most contentious parts of a divorce is the division of property, including the assets and the debts acquired during the marriage. The couple generally negotiates a settlement that the court ultimately approves, and the settlement usually takes into account the contribution and financial situation of each spouse.
This is not the case in an annulment. Debt acquired during the union is held jointly, and each party can be responsible for the entire amount. If one partner skips town, the other is left holding the bag. If the bill is delinquent, the card issuer can go after both parties or just one -- most likely the one with the bigger paycheck.
There are a few ways to handle the situation. Most family law professionals would put negotiation at the top of the list. The parties can figure out who is responsible for what and agree, preferably in writing, to pay their fair shares.
A less amicable route would include litigation. One partner would pay the entire debt then file suit against the other. The risk of splitting the bills is that one party won't pay -- the delinquency can affect both parties' credit ratings. Paying the full amount is essentially paying to preserve a good credit score.
Circumstances and personalities will determine the choices each couple takes to dissolve their marriage. Deciding between divorce, legal separation and annulment depends on more than the law.
Source: CreditCards.com, "Annulment vs. divorce: How it impacts finances," Tamara E. Holmes, Dec. 30, 2011