Divorce

Who is Liable for Credit Card Debt in Divorce?

When a married couple decides to end their marriage, they face many difficult decisions. One of the most important and potentially complex issues is dividing their property, assets and debts. One significant source of debt for many couples is credit card debt.

This blog will discuss who is liable for credit card debt in a divorce and give you manageable solutions to tackle this aspect of divorce with an attorney.

Does asset division apply to credit card debt?

According to Bankrate, 35% of Americans carry credit cards monthly as of January 2023. It is not abnormal for a couple to acquire debt, but it is a concern after or during a divorce. 

First and foremost, it’s essential to understand that divorce laws vary by state, and the specifics of who is liable for credit card debt can also vary depending on the individual circumstances of the case. However, some general principles can help understand this issue.

Credit card debt incurred during the marriage is generally considered marital debt, meaning both spouses are responsible for paying it off. Marital debt distinctions are valid regardless of which spouse purchased or opened the credit card accounts. The reasoning is that in a marriage, spouses benefit from any purchases made on credit, even if only one spouse made the purchase. Complex property division is an area that becomes complicated for parties if more than one home is owned. Some homes are inherited and others may have been purchased before marriage, but are still carrying a mortgage. 

What happens to debt acquired before marriage?

If one spouse incurred credit card debt before the marriage, that debt is usually considered separate debt and is the responsibility of that spouse alone. Similarly, if one spouse incurs credit card debt after the separation or divorce, that debt is also usually considered separate debt and is the spouse’s responsibility alone.

However, even if one spouse is ultimately responsible for paying off credit card debt, both spouses may still be liable to the credit card company. Liability in this way means that if the accountable spouse fails to pay the debt, the credit card company may go after the other spouse for payment. In order to tackle this issue, consulting with a family law attorney is recommended.

How does debt allocation work after a divorce?

In some cases, spouses may allocate responsibility for credit card debt as part of their divorce settlement. For example, one spouse may agree to take on a larger share of the debt to receive a larger share of the marital assets. Alternatively, the spouses may agree to pay the debt jointly over time.

Simply closing a credit card account does not necessarily absolve either spouse of responsibility for any existing debt on that account. If there is still a balance on a credit card account, the spouses must work out how to pay it off, even if the account is closed.

Credit card debt can be a complex issue in divorce, and liability for the debt will depend on various factors. In general, however, credit card debt incurred during the marriage is considered marital debt and is the responsibility of both spouses, even if only one spouse made the purchases. Both spouses may also be liable to the credit card company for the debt. However, spouses may be able to allocate responsibility for the debt as part of their divorce settlement or agree to pay off the debt jointly over time.

Do you have questions about debt or property division? Contact us today.

The team at SLG Family Law understands the complicated and legally complex process of dividing marital property, providing experienced family lawyers adept at making these decisions. With SLG Family Law’s knowledgeable and skilled staff in your corner, you can rest assured that your best interests will be protected during this difficult time. 

If you need help, contact us today. We are here to help you.