Those little plastic cards look harmless enough, but most people realize that credit card debt is very real and can quickly become burdensome. For those involved in a divorce, credit card debt can be a major sticking point, and a debt that has to be either claimed, assigned or divided. Who has to pay for what depends a lot on what state you live. Read on for some quick and useful information about how credit card debt is treated in divorce.
Equitable Distribution States
Nearly every state uses this model of dividing debt (and assets), and if you live in an equitable distribution state you may need to become very aware of what your spouse has been charging on their cards, if held jointly. If the card is one party's name only, that debt belongs to the person on the account, and only that person. Even if the other spouse was provided with a second card and that spouse used that card, the responsibility for paying that balance belongs to the account owner.
For jointly held accounts, the division rules can be tricky. Paying the joint debt off before filling for divorce would be the best case scenario, but that may be difficult to accomplish when you are already dealing with a marriage that's coming loose at the seams. A judge in these equitable distribution states may simply divide the joint debt 50/50, unless one party can show proof that they never used the card.
Community Property States
Only 10 states follow this model, and the divorce laws there considers the debt and assets of the couple to be part of a marital estate and owned by both people, or the community. This means that credit card debt is joint debt, no matter who's name is on the account. If you haven't been paying attention to your spouse's credit use up to now, you could be in for a surprise. Only the debt incurred while married falls into the marital estate bucket, however. It's also important to note that once you separate and live separately, you are not responsible for your spouse's credit card charges, just the charges made up to the date of separation. Careful record-taking during this time is vital.
Of all the contentious issues that may arise during martial settlement negotiations, credit card use can be one of the most emotional. The use of credit and spending habits often play a major part in the ending of a marriage. No matter what type of state you live in, work closely with your divorce attorney about the issue of credit card debt, provide him/her with accurate financial information and follow your lawyer's advice about resolving this issue.