Credit Card Debt In Divorce

Divorce is a difficult time for both spouses and there is much to be done before the final paperwork. Besides dividing up assets and property the debts must also be dealt with, especially if one spouse brought more debt into the marriage than the other. Because divorce can complicate things in the event of bankruptcy, it is best to finalize debt liabilities as part of the divorce proceedings.

Dividing Debts

Most people hold two types of debts in marriage, jointly held debts and individual debts. Jointly held debts are any debts that are accumulated together in marriage and/or name both parties as liable for the debt. Joint purchases such as a house, car and even joint credit cards are common debts that share equal responsibility in marriage. These debts are difficult to manage in a divorce as the decision must be made as to which spouse will take liability over the debt. The fair thing to do is split the debt liability equal among both spouses. While this may be done easily by the courts, getting creditors to recognize the separate debt liabilities takes work. Further, credit negotiations may be more likely at this point if the creditor feels that one particular spouse may default on the payments after the divorce. Having the specifics of how debts are to be divided in the divorce papers is extremely important in protecting both parties.

Individually held debts are those that only name one spouse as the debtor and person liable for debt repayments. In most cases, individually held debts are those that were accumulated prior to entering marriage. Debts such as student loans, tax debts, medical debts and individual credit cards are all common individual debts. These debts are generally assigned to the original debtor in divorce and the alternate spouse is rarely left with any liability over these debts. However, it is important to have this fact specifically outlined in the divorce papers to prevent confusion in the future if a creditor attempted to collect from the alternate spouse.