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Credit Card Debt and Divorce: What You Need to Know

Posted on in Division of Assets

b2ap3_thumbnail_credit-card-debt-divorce.jpgIf you are planning a divorce, or are already in the divorce process, you are, most likely, hoping for a clean start. Separation from your spouse can mean new-found freedom, the ability to make your own choices, and ease the emotional burden of being in an unhappy marriage. If you and your soon to be ex-spouse have any shared debt, however, your chances of financial freedom are at risk. Before a divorce, couples need to ensure that they have properly established what will happen with the remainder of their joint credit card debt.

Harsh Realities

Credit card companies are not concerned with divorce. If you and your spouse opened joint lines of credit and then divorce, you are both still responsible for the debt. Furthermore, credit card companies have no problem going after both spouses, even long after being divorced, in order to receive payment. No recently divorced person wants to deal with the stress and pain of old credit card debt, or risk damaging their individual credit score, so it is important to take steps early on in the divorce process to ensure that your debts are divided properly and everything is taken care of.

Eliminate Debt

If possible, consider paying off your joint debt prior to your divorce. Joint debt is any credit card or line of credit on which you and your spouse were both co-signers. Any joint debt is both spouses' responsibility, even long after divorcing. Joint debt, for the purposes of credit cards, is not to be confused with general marital debt under law. Marital debt will include both joint and individual credit card debt incurred after the marriage began.

Take an inventory of your wallet, and have your spouse do the same. Look for any credit cards that you may have opened together, and aim for paying off that debt before separating. If a card was opened in one spouse’s name and the other was simply added as an additional card holder, only the spouse who opened the card is responsible for the debt, as far the credit card companies are concerned.

Divide and Conquer

Your best option for ensuring that no further joint debt is accrued is to cancel all joint lines of credit as soon as possible. As soon as you know that you and your spouse are separating, try to cancel all of your shared credit cards, and open new ones in your name only. Also, inform the court of any shared debts early on in the process. Once your debt is officially on the record, it will be much more difficult for your soon-to-be ex-spouse to incur any further debt for which you could be liable.

You and your spouse should choose a date after which joint debt will be separated or paid off. One option is to transfer equal portions of the debt onto new, individually-opened lines of credit, so that each spouse can continue to make payments without being held responsible for the other party's half. Other options include paying off the debt completely before divorce. Many couples do this using joint savings accounts, or accessing home equity credit on the marital home. No matter which option you choose, the goal here is to ensure you will not be held responsible for your partner’s debt down the road.

An Effective Debt Agreement

If you and your spouse can not avoid sharing joint debt post-divorce, you can set up your divorce agreement to establish which spouse will be making which specific payments. While this may not keep creditors from coming after you if your spouse fails to make comply, you can at least refer back to the court, which can help force your spouse to pay. Still, court processes are lengthy and costly, so splitting debt prior to divorce is a better option.

No one wants to deal with the financial stress of their marriage long after it is over. Taking steps early on to separate your debt and establish who is paying for what can provide future peace of mind. If you are struggling with divorce, a qualified Naperville divorce attorney is here to help. Contact the Pesce Law Group today at 630-352-2240 to learn more today.


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