Dealing With Credit Card Debt in Divorce, Who Pays What?

Divorce can be one of the most difficult times in California resident’s life. One of the main issues in divorce is the division of assets. However, many do not think about another item that must be divided: credit card debt.

With the recent economic times, many Americans have ended up relying more heavily on credit cards for everyday expenses. Unfortunately, this reliance has in many cases lead to a substantial amount of credit card debt that must be dealt with in divorce.

Joint credit card accounts can be one of the most complicated things to deal with in a divorce. If debt is accumulated on a joint account, and the couple decides to get divorced, both parties are liable for the debt. Credit card companies do not have to follow divorce decrees, which means that if an ex-spouse decides not to make any payments, the credit card company can go after the other ex-spouse.

This is why most divorce and financial experts recommend either paying off the debt or dividing up the debt on separate credit cards. The goal is to not have any joint credit cards left during the divorce process so is no lingering possibility of being liable for an ex-spouse’s debt.

This is especially important if your ex-spouse may ever consider filing for bankruptcy. If the ex-spouse files for bankruptcy and the couple still has joint debt, the creditors in the bankruptcy proceeding can come after the non-filing ex-spouse for that debt.

If it is not possible to fully pay off a joint credit card before divorce, it is important to ensure that the court is aware of the joint card and the current debt at the time of the divorce filing to prevent one spouse from running up a large bill that the other may have to pay. If there is too much joint debt to pay off or split between new cards, bankruptcy may be an option to eliminate or at least lower the debt before filing for divorce.

Source: CreditCards.com, “Dividing credit card debt in divorce,” Amy Buttell, April 22, 2013.