Dividing Credit Card Debt in Divorce: A Fair Approach

There’s almost nothing worse than being saddled with debt, especially someone else’s. In today’s economy, credit cards are a lifeline for many, but your spouse’s spending habits might differ drastically from your own. If you’re facing divorce, understanding how to fairly divide credit card debt is crucial to avoid being burdened with potentially hundreds of thousands of dollars in liabilities.

Why Choose James E. Crawford, Jr. & Associates in Maryland, Virginia, Pennsylvania, or DC?

Debt in a divorce, much like assets, should be divided equitably between spouses. However, the division isn’t always straightforward. It depends on several factors, including when, why, and how the credit card debt was accumulated. At James E. Crawford, Jr. & Associates, we understand the complexities of debt division in divorce and are committed to helping you achieve a fair outcome.

Contact us today for a free consultation:

• Call us at (888) JCLaw-10
• Text us at (443) 829-1446
• Email us

Credit Card Debt Might Not Be Your Responsibility

The first step in determining responsibility for credit card debt is identifying whose name is on the accounts.

• Best-Case Scenario: If you and your spouse used a joint credit card with both names on the account, you are both responsible to the credit card company. This often leads to the debt being split 50/50 in the divorce.
• Worst-Case Scenario: You have credit card debt solely in your name. Even if you used the card for shared living expenses like groceries or mortgage payments, you could still be liable for the entire debt amount.

Understanding the Nuances of Credit Card Debt Division

During a divorce, credit card debt is typically addressed through the divorce settlement or a court order. The division can depend on various factors and state laws, but here’s a general breakdown:

1. Individual vs. Joint Credit Cards:

• Individual Cards: If a credit card is held solely in one spouse’s name, that spouse is generally responsible for the debt. This is a straightforward situation where the cardholder assumes the financial obligation.
• Joint Cards: When a credit card is a joint account, with both spouses listed as account holders, both individuals are responsible for the outstanding balance. This means the creditor can pursue either spouse for the full amount owed.
• Community Property States: In community property states, the rules are different. Both spouses are generally responsible for debts incurred during the marriage, regardless of who used the credit card. This is because community property laws consider assets and debts acquired during the marriage as jointly owned.

2. Responsibility After Divorce:

• Divorce Decree/Settlement: The divorce decree or settlement agreement is a crucial document. It outlines which spouse is responsible for which debts, including credit card debt. This agreement is legally binding and dictates the obligations of each party.
• Creditor Liability: Even if the divorce decree assigns responsibility for the debt to one spouse, creditors can still pursue either spouse for payment. This is because the agreement between the spouses doesn’t override their agreements with the credit card company. Both parties are still legally responsible for the debt.
• Payment Responsibility: If one spouse is responsible for a debt and fails to make payments, the other spouse could be held liable, particularly on joint accounts. This can have a severe impact on credit scores and financial stability.

3. What to Do During the Divorce Process:

• Close Joint Accounts: Ideally, spouses should close joint credit card accounts during the divorce process to prevent further debt accumulation. This step ensures that neither spouse can incur additional debt that the other will be responsible for.
• Negotiate Responsibility: Spouses should negotiate with each other, and potentially with the court, to determine who will be responsible for which debts. This negotiation process is critical in reaching a fair and equitable agreement.
• Seek Legal Advice: Consulting with a divorce attorney can help navigate the process and understand the implications of credit card debt in a divorce. An attorney can provide guidance on state laws, negotiation strategies, and how to protect your financial interests.
• Consider Paying Off Debts: In some cases, spouses may decide to use their assets to pay off joint credit card debt, allowing them to start fresh. While this requires a significant financial commitment, it can provide peace of mind and a clean slate for both parties.

Understanding Equitable Distribution vs. Community Property

The division of credit card debt in a divorce often hinges on whether you live in an “equitable distribution” state or a “community property” state.

• Equitable Distribution: Most states follow equitable distribution, which aims for a fair, but not necessarily equal, division of assets and debts. Courts consider various factors, such as each spouse’s income, earning potential, and contributions to the marriage, when determining who is responsible for which debts.
• Community Property: In community property states, assets and debts acquired during the marriage are generally owned equally by both spouses. This means that credit card debt incurred during the marriage is typically split 50/50, regardless of who made the charges.

Factors That Influence Credit Card Debt Division

Several factors can influence how credit card debt is divided in a divorce:

• Who Incurred the Debt: If one spouse incurred the debt without the knowledge or consent of the other, the court might assign a larger portion of the debt to the spouse who incurred it.
• Purpose of the Debt: If the credit card charges were used for marital expenses, such as household bills or family vacations, the debt is more likely to be considered a shared responsibility. However, if the debt was used for personal expenses, like gambling or an affair, the court might assign it solely to the spouse who incurred it.
• Financial Misconduct: If one spouse engaged in financial misconduct, such as hiding assets or racking up excessive debt, the court might consider this when dividing the debts.

Protecting Yourself During a Divorce Involving Credit Card Debt

• Gather Financial Records: Collect all credit card statements, account agreements, and any other financial documents related to the debt. This information is essential for determining the total amount of debt and how it was incurred.
• Close Joint Accounts: As mentioned earlier, close all joint credit card accounts as soon as possible to prevent further debt accumulation.
• Monitor Your Credit Report: Regularly check your credit report to ensure that you are not being held liable for any debts that are not your responsibility.
• Consult with a Financial Advisor: A financial advisor can help you understand the long-term financial implications of the divorce and develop a plan for managing your finances after the divorce is finalized.

Getting Started with James E. Crawford, Jr. & Associates

Navigating credit card debt during a divorce can be complex and stressful. At James E. Crawford, Jr. & Associates, we’re dedicated to providing you with the legal support and guidance you need to achieve a fair and equitable outcome.

Contact us today for a free consultation:

• Call us at (888) JCLaw-10
• Text us at (443) 829-1446
• Email us

We proudly serve clients in Maryland, Virginia, Pennsylvania, and DC, and we’re ready to put our experience to work for you. Let us help you protect your financial future and move forward with confidence.