Achieving full financial separation after divorce is a challenge. Spouses generally combine their income and share financial obligations for years while married. It can be difficult to address commingled resources and debts.
Married couples often take out credit cards jointly during the marriage. Even if they each have accounts in their own names, balances accumulated during the marriage are likely subject to division during the divorce proceedings. Who typically assumes responsibility for marital credit card debt when spouses divorce?
Every couple requires a different solution
There are multiple ways to address credit card debt in a divorce. Sometimes, each spouse agrees to accept responsibility for a specific portion of the overall debt. Other times, one spouse retains most or all of the debt due to their higher income and their retention of high-value marital property.
Some spouses also choose to use marital resources, such as home equity or liquid funds in savings accounts, to pay off credit card balances in full. The income of each spouse and the possibility of a future default leaving one spouse responsible for debts that the courts allocated to the other are important considerations when negotiating a property division settlement during a divorce.
Those who worry that their spouses may file for bankruptcy or fail to make payments may want to consider taking responsibility for more debt. Many spouses could benefit from finding solutions that involve paying the debt as part of the divorce process instead of rebuilding with large financial obligations accrued during the marriage.
Reviewing the marital estate, including credit card balances, can help spouses identify viable solutions for their financial concerns. Spouses need to consider their budgets and their future financial exposure when making property and debt distribution decisions.