People preparing for divorce often have a lot of questions about the process. They aren’t sure what rules apply or what to expect if they take different issues to court. Frequently, uncertainty about economic or financial matters can make people feel relatively anxious about the idea of divorcing.
They may worry about losing property that they depend on for their financial stability or needing to take responsibility for more debt than they can manage on their own. Couples who enjoy a comfortable standard of living often also accumulate quite a bit of debt during their marriages. They may carry thousands of dollars in balances on their credit cards.
Who takes responsibility for financial obligations such as credit card debts when spouses divorce?
Spouses can divide their own debts
People preparing for divorce typically have the option of reaching their own settlement arrangements. They can work together to decide how they want to divide their property and their financial responsibilities.
One spouse might accept the responsibility to pay off the credit cards because they earn more money than the other spouse. Spouses can also try to divide responsibility as evenly as possible in scenarios where they both have decent earning potential. In some cases, spouses choose to use marital resources to pay off their shared debts.
Seeking to pay credit card debt in full during the property division process can protect people from financial challenges in the future. Even with a court order making one spouse responsible for certain marital debts, the risk exists for them to default or file for bankruptcy. By using marital property to pay off marital debts, both spouses can move forward after the divorce without ongoing financial responsibility stemming from the marriage.
Occasionally, spouses may be able to exclude certain debts from inclusion in the property division process because those debts are the result of inappropriate financial conduct, such as intentional dissipation to reduce the value of the marital estate. In such cases, the spouse who incurred the debt may be solely responsible for paying it off.
If spouses can’t resolve their asset division disagreements, then they may need to litigate. Determining how to divide marital debts can be as important as making arrangements for the division of valuable property. Dividing or preemptively paying off credit card debt can both be viable solutions to propose during asset division negotiations.