Entering a legal contract can have unforeseen consequences. It is made abundantly clear by unpleasant divorce litigation that many White Plains couples do not consider when getting married. The recent spike of bankruptcy filings shows that consumers may not realize the full extent of their spending power and may not understand that debts must be repaid.

When a creditor comes knocking, a marriage license can sometimes work to your benefit. If money is in joint accounts and the home is in both names, some states call these assets "tenants in the entirety," and they cannot be seized by creditors if only one spouse is being sued.

That protection only works on accounts held by married couples. If the account is between non-spouses, such as a parent and adult offspring, creditors can try to take control of the account. In one case, a competent lawyer fought off the creditors by proving that the parent owned the money, not the son who was being sued. The process, however, was lengthy, complicated and expensive.

While retirement accounts, such as IRAs, 401(k)s and pensions, are usually safe from creditors, they are fair game in a divorce. Small business owners often have a lot to lose in divorce and credit litigation. One suggestion is to put money into a trust. Payments are made from the trust, but creditors cannot touch it. It is irreversible, however, so it should not be done hastily. It is good protection for future disasters, small or large, and small business owners are strongly suggested to look into it.

Source: STLtoday.com, "Keeping the judgment hounds at bay," Jim Gallagher, Feb. 5, 2012