Tennessee Wife Must Release Ex-husband from Marital Debt on House

Tennessee law case summary on division of marital debt in divorce and family law from the Court of Appeals.

Susan Elaine Dobbs v. Brooke Anthony Dobbs – Release from Marital Debt in Tennessee Divorce Law

This case involves a husband’s request to be released from the debt on the home he and his ex-wife owned.

The wife, Susan Elaine Dobbs, and the husband, Brooke Anthony Dobbs (Husband) were married on September 4, 1993 and had one child in February 2007.   The wife worked as a radiation therapist and the husband worked as an over-the-road truck driver in a family business in Richland Center, Wisconsin.   The couple bought a home together in Castalian Springs, Tennessee.    In September 2009 the wife filed for divorce which was granted in June 2011.

The court awarded the marital residence to the wife, valued it at $235,000, and gave instructions for the wife to hold the husband harmless for the debt on the property.  The debt included both a first and second mortgage totaling $233,792.  The husband appealed the trial court’s decision, arguing that the court should have required the wife to refinance the home in her name alone.

Wife to “hold harmless” the husband

The trial court awarded the wife the marital home, required her to be responsible for the home and to release the husband from any debt on the house.  The appeals court cited three ways in which courts have granted property to one spouse while both are still liable for the debt.

One approach is to refinance the property.    The spouse granted the property takes out a new loan in his or her own name and pays off the joint debt with that new loan.  In this way, the ex-spouse is no longer listed as a debtor and therefore not liable for the debt.

Another approach is for the parties to continue to hold the property jointly until a fixed date.  At that later time, the joint property either needs to be financed or sold.

A final option is what the trial court chose in the present case.  The court gives an order that includes a provision stating that the spouse who obtains the property will hold the other spouse harmless – that is, not liable – for any debt on the property.   In this case, the order was given in the divorce decree.

The appeals court, when weighing these options, considered the husband’s ability to purchase his own home.   His monthly income at the time of trial was $2,174 and his expenses (without water, gas and rent) were $1,777 leaving him with approximately $400 at the end of each month.    The husband argued that taking into consideration the difficulty he has in terms of income, in addition to the low credit rating he has because his name is on two mortgages, it’s unlikely that he will be able to obtain another mortgage so that he can purchase his own home.   Therefore, the husband argued, the court should require the wife to refinance the home and pay off the joint debt.

The appeals court agreed with the husband, holding that a Tennessee court must consider the ability of each spouse to purchase capital assets when it divides up the marital property.  Therefore, the case was sent back to the lower court to determine a reasonable time period in which the wife will release the husband from the marital debt.

No. M2011-01523-COA-R3-CV (Tenn. Ct. App. Aug. 7, 2012).

See original opinion for exact language.  Legal citations omitted.

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