A divorce decree addresses, among other things, division of both the assets and debts accrued during the course of a marriage. This includes credit card debt. Credit card companies, however, are not bound by divorce decrees.
Unless you are careful right from the moment you decide to separate, you can end up being liable for credit card debt incurred by your ex. Experts recommend that divorcing couples exit the marriage with no joint debt.
Joint Credit Card Accounts
Although 48 percent of married couples keep separate bank and credit card accounts, many others use joint accounts instead. When divorce is anticipated, make every effort to close any joint accounts, paying off the existing debt or allocating it to new credit card accounts – one for each of the responsible spouses.
If you rely instead on a divorce degree that allocates a portion of the debt to your ex, but both names stay on the account, creditors can still come after you for any unpaid debts if you ex fails to make payments or declares bankruptcy. These debts become yours. In addition, your ex’s late or missed payments will damage your credit record.
Authorized User Credit Card Accounts
Some credit cards are in one spouse’s name, with the other listed as an authorized user. Authorized users cannot be held liable for charges on this type of account. If you are the owner of the account, immediately request that your spouse be removed as an authorized user. If you are the user, ask to have you name removed from the account.
Community Property States
In community property states, all debts incurred during a marriage are considered joint debts, even if only one spouse signed for the loan or credit card. Both parties are responsible for all credit card charges, no matter who made them. Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin and Alaska (an opt-in state).
During and after a divorce, check your credit report with each of the three primary credit reporting bureaus, Experian, Equifax and TransUnion. Make sure that any credit card accounts in these reports reflect your recent changes. Contact the credit bureaus to dispute discrepancies. Verify all three of your credit reports on a regular basis.
A Divorce Lawyer Can Help
The law surrounding divorce and credit card debt can be complicated and the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a divorce lawyer.