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How to Divide Credit Card Debt in Divorce

Posted on : February 28, 2013

credit-cardsThe stress of having a spouse with an out-of-control credit card spending habit can certainly strain a marriage and lead to divorce, but increasingly, Americans are being forced to use their credit cards just to make ends meet. Before the recession, divorces were primarily about how a couple’s assets were going to be divided. Sadly, in today’s down economy, people are having to worry more about who is going to get stuck with the credit card debt than they are about dividing the assets.

In the same way that “marital” property is distinguished from “separate” property, any debt taken on during the marriage is also considered to be a “marital” debt and is subject to Georgia’s laws of equitable division. What many people fail to realize is that a credit card in their spouse’s name alone in no way guarantees that their spouse will be the one stuck paying for it. The debt will be divided using the same basic legal principles as determining who gets a toaster or who gets the house. Equitable division does not mean that the debt will necessarily be split 50/50 either, but only that the court will look to a number of factors in determining the most fair or “equitable” way to allocate the debt between the parties. Since there is no pre-determined formula for splitting debt, hiring an experienced divorce attorney is the best way to ensure that the debt division is as fair to you as possible.

How Much Credit Card Debt Do I have?

The first step in handling a divorce involving the division of debts is to understand the debt in relation to the assets and have a complete financial picture of the marriage. Clients should always run a credit check with each of the 3 major credit reporting agencies (Equifax, TransUnion, and Experian) at the start of their divorce. By law, this can be done for free one time per year and can provide a wealth of information concerning credit card accounts and other various debts. Obtaining a full understanding of a couple’s finances may be the most time-consuming portion of your divorce (often referred to as the “Discovery” phase), but it is also of the utmost importance since you cannot begin to decide how to divide anything until you know what there is to be divided.

It is important to learn the difference between being responsible for a debt within the context of your divorce and being responsible for a debt directly. If you and your spouse applied for a credit card together, then you have a joint account. With a joint account, the Court can order your spouse to make payments on that account, but if your spouse fails to make the payments, the credit card company can (and generally will) ding your credit and look to you for the payment. Even if your spouse later makes the payment, there is little that can be done about the hit to your credit score. If you have an account that goes into default, it may take you up to 7 years before your credit score is no longer affected. Since it is not in the best interest of the credit card company, it is very rare that the company would agree to remove either of your names from a joint account.

Spouses often have a credit card with their name on it, but they are only an authorized user on the account. These accounts are in the name of only the one spouse who applied for the card. For accounts like this, the Court may order either party to make the payments, and the credit card company can only turn to the spouse whose name is on the account in the event of a missed payment.

If your spouse is running up the credit card bills, it may be a good idea to begin the process of controlling the credit card spending as early as possible. Generally speaking, joint accounts should be closed and individual accounts should be opened instead. If your spouse is an authorized user on your account, your authorization can be withdrawn. An attorney can advise you on whether or not this should be done, as a deliberate attempt to cut your spouse off financially may negatively impact your case.

For more advice on the division of debts and credit card bills from a Roswell or Alpharetta divorce attorney, call me, Elyssa K. Williams, Attorney (678) 613-5732, to schedule an initial consultation.

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