What Happens to Credit Card Debt in a Divorce?

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Divorce Law
This article was reviewed and approved for publication by Attorney Charlotte Christian.

What Happens to Credit Card Debt in a DivorceAs a married couple, you’ve collected many things together: shells from the beach on your honeymoon, postcards from vacations, and Christmas ornaments… However, perhaps you, like many other couples, have also collected credit card debt. If you are now facing the daunting reality of divorce, you may wonder what will happen with that credit card debt in divorce proceedings.

The answer to that question will depend on several variables, including your resident state, if the card is in your name, whether it is a joint credit card or you are a co-signer, or if the debt was assigned to you in a divorce proceeding. You will need to have that conversation with your divorce attorney, but here are a few factors to consider while dealing with credit card debt during divorce.

Creditors Don’t Care Who Has to Pay

You may be feeling the heartbreak of your divorce, but you’ll have to accept that creditors are going to seem heartless towards your situation. Lynn Wardle, a professor at BYU Law, notes that creditors are constitutionally protected from getting involved in divorce proceedings. 

She states, “The Constitution protects against the ‘impairment of contracts’ such as the contract between the credit card company and the borrower. Additionally, the credit card companies usually are not parties to the divorce action and it would deny them due process to take their valuable financial rights in those circumstances.”

Marsha Garrison, a professor at Brooklyn Law School, agrees with Wardle, stating, “Bottom line, a divorce court or divorce agreement may determine obligations of spouses toward each other regarding joint debts, but not creditors’ rights regarding collection from debtor spouses.”

Credit card companies legally expect to get paid promptly, and they don’t care which of you does it. They are within their rights to hold you responsible for any credit card debt in divorce if your name is on an account. Even if your former spouse is “supposed to” pay the debt, if they don’t, your credit can get damaged, and collection activities can be directed against you.

Harsh? Maybe. But if you have an agreement with a credit card company – no matter what is happening between you, your spouse, your divorce attorneys, or the judge – that creditor will hold you to it. That being said, although you and your spouse will ultimately be liable for making good on payments, your bank may be willing to work with you to adjust payment due dates during this difficult time. Consider speaking with your banker regarding options that may exist.

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What’s Mine Is Mine…

Understandably, if you and your partner have credit cards in your own names, you will each be responsible for paying off the balance on your own card, regardless of your marital status. Your divorce proceedings will not affect that reality. This is the case in most states (called common law states).

Debt incurred during the marriage is typically a joint responsibility. This is notable when both parties are co-signers on credit cards. It may not apply if one spouse is just an additional cardholder, with the card under the other spouse’s name.

What’s Ours Is Ours…

Shared accounts – cards that contain the names of both parties as primary account holders or as co-signers – can affect the credit standing of both users. In these cases, both you and your spouse are equally liable for the debts incurred. Plan to discuss these debts with your lawyer during the divorce process. 

You may also want to file documentation with the courts early on regarding joint credit cards. In this way, you can prevent your spouse from intentionally (or unintentionally) running up debt that you might ultimately also be responsible for.

Ellen Craine, a lawyer and social worker who runs Michigan-based Craine Mediation, recommends another way to prevent additional joint debt, “Set a date after which agreed-upon portions of joint debt are to be transferred onto new cards in each person’s name and joint cards canceled.”

  • Zero balance: When the shared account has zero balance during your divorce, you can close the account to prevent any further issues. 
  • Remaining balance: If there is a current balance in the shared account during the time of the divorce, keep in mind these three things: creditors simply want their payment; they are not obligated to change their payment terms because of your divorce; the payment due date is still important. 

This means divorcees with a substantial credit card debt will have to figure out how they will manage the payments; otherwise, they could risk accruing penalties like interest charges and ruined credit score. 

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Can Divorce Affect Your Credit Card Score?

Your marital status does not directly affect your credit score. But, if you have a joint account with your spouse, your ability to pay the balance on time can impact each other’s credit standing. This means if your former spouse skips a payment, makes the payment late, or maxes out the credit card, your score will be affected as well. 

During a divorce, you must heed your responsibility to pay the credit card debt in accounts that have your name on it, even if your divorce decree states otherwise. In cases where your ex-spouse has been assigned responsibility to handle the accounts under your name, your credit score will be affected if there are any missed payments or if the account defaults. 

A healthy credit score is fundamental to secure financing in your post-divorce phase of life. So, here are three tips you can use to shield your credit score from divorce:

  1. Identify all the accounts linked to your credit score: The easiest way is to identify all the credit cards that may be connected to your credit profile is by pulling up your credit report from Experian, Equifax, and TransUnion. 

Here, you will be able to see all your joint accounts (the one you share with your former spouse), along with the accounts to which your spouse was added as an authorized user. Watch these closely until it’s time to close these accounts. 

  1. Get a separate account as soon as possible: Aside from the joint account, you must have access to a personal credit card. This way, you do not have to continuously rely on the joint credit card to make payments for your personal needs. 
  2. Freeze your credit: You can freeze your credit if you think your former spouse may turn vindictive and open new lines of credit under your name. A credit freeze is temporary and prevents anyone, even you, from opening a line of credit under your name for a specific period. 

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Protect Yourself From Credit Card Debt in Divorce

Knowing that credit card companies can pursue you to pay a jointly incurred debt that your former spouse doesn’t pay, it’s important that you secure your finances and purposefully protect yourself during the divorce process. Here are some practical tips that may help:

  • Strive to leave your marriage with no joint debt
  • Inventory your wallet
  • Cancel joint credit cards
  • Pay off debts before the divorce (if possible)
  • Transfer debts to cards owned solely by the party responsible
  • Change your personal bank account passwords
  • Remove your ex-spouse as an authorized user on personal credit cards
  • Change personal account numbers.
  • Communication Is Key

At the end of the day, the priority in dealing with credit card debt in divorce can affect your financial standing. There may be times that you’ll need to choose to put your pride aside to avoid costing you more in the long run in finance charges, credit score damage, and peace of mind. 

Charlotte Christian Law Is on Your Side

Call our Alabama divorce attorney at (256) 859-7277 to learn more about how your divorce will impact your personal credit debt obligations.

The preceding is being provided for informational purposes only and is not intended as legal advice. Consult your attorney with specific questions regarding your personal or joint credit card debt in divorce.

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