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Credit Card Debt & Divorce: 5 Steps to Protecting Your Credit From Divorce

Credit Sesame
couple reviewing finances

Divorce is always painful, but what adds salt to the wound is paying on debt that your spouse acquired. After all, joint accounts are common in marriages, and after a divorce, all a creditor sees is that you agreed to repay the debt. The dissolution of your marriage does not negate that agreement. So, what can you do if your spouse has racked up the debt and you don’t want to pay?

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  1. Close the joint accounts and move the balances to separate accounts. Obviously, this will be tremendously easier if the divorce is amicable. However, this can also be done during the separation phase before divorce proceedings begin with a mediator, who is typically much less expensive than a lawyer. A mediator can help divide the remaining debt and once the balances have been transferred to separate accounts, the joint accounts can be closed. This is especially helpful in avoiding vindictive divorce games where spouses may try to rack up joint credit cards with crazy shopping sprees during a to get back at one another.
  2. Close the joint accounts and put them in your name. This maneuver can prevent a vindictive spouse from putting any more debt on the joint cards. Make sure the court is aware of what you’ve done so in the equitable distribution, one of the last phases of the divorce process, the debt can be properly assigned.
  3. Pay off the debt before the divorce is finalized. If your debt is manageable, the easiest route may be to simply eliminate the debt, close the joint accounts, and free each other from financial entanglements. One of the preferred methods of doing this is to use joint assets, such as a joint savings account to clear the debts. Again, this can be easier said than done, and many people simply aren’t in the situation where a quick payoff is financially possible.
  4. File for bankruptcy. If the debt load is too burdensome, and both partners can agree to filing at the same time, creditors cannot come after either party. However, if only one party files, creditors can come after the other spouse to collect on the debt. Nevertheless, this is a costly method and it can end up trashing your credit score for years to come.
  5. Grin and bear it. If you’re assigned the majority of the debt, so be it. Protect your credit by faithfully paying the debt. However, if your ex is assigned the majority of the debt, and they fail to pay, while you are legally not obligated to pay, you need to be aware that this can hurt your credit as well as theirs. One tactic is to simply pay up. Keep up with the payments, but then take the spouse back to court and have the court indemnify you against the charges you’ve paid.

Your decision on how to handle your marital credit card debt should also reflect state laws, as certain states known as community property states hold both parties responsible for joint debt, even if the accounts were in an individual name. Refer to your lawyer or mediator for advice on which method would work best for your case.

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Published June 13, 2012 Updated: September 8, 2016
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