Dealing with Credit Card Debt after Divorce

by John Stevenson on March 8, 2011

What they say is true, unfortunately – you can divorce your partner, but not your credit card company. It is important to protect yourself from debt incurred in the wake of divorce should your marriage hit the rocks. It can be very hard to get rid of debt from joint credit cards, and card issuers will not be bound by divorce decrees. Instead, they will think nothing of going after you if your ex-spouse refuses to pay up. Your life already seems like a mess, and it may be hard to think of money and credit cards. But you should as your financial future depends on the choices you are going to make now.

If you have decided to get a divorce, and nothing can change your mind, you should take steps to leave your marriage without joint debt. You can divide the debt on cards that both of you use and move it to cards that are in each partner’s name. Or you can divide up the debt on joint cards. You should also make sure you cancel all joint cards. If one of you is not eligible for an individual card, you can get a relative to cosign for it. Your mother, who hated your (now former) husband, would be most happy to cosign for you.

Never make the mistake of leaving the marriage with joint debt. If your ex refuses to pay or files for bankruptcy, the credit card issuer has the right to demand the total amount of the debt from you and you alone. Plus, you have to pay the interest and all penalties. Of course, you can sue your ex, but going back to court will waste a lot of time and money. And you already know that divorce is costly enough, to the point that some people have to apply for a loan.

A lot of couples, when they finally split up, start acting very immature. They start blaming each other of spending more and rack up debt. If you cannot reach an agreement with your ex, which is very likely, seek help from a financial planner (if you could, you wouldn’t have had to get a divorce, would you?). It will cost less than a lawyer.  

The debt accumulated during a marriage must be paid off by both partners if they both signed on the credit cards. However, if one signed, and the other was just an additional cardholder, the latter party does not bear any responsibility.

Keep good records of your expenses after the date of divorce. This way, you will know what is yours and what isn’t. File documentation about the joint credit cards and the money owed early on. This is another way to keep your ex from racking up debt, which you could be forced to pay. The two of you can establish a time frame, after which the joint debt is transferred to individual accounts.

If you have a jointly owned real estate property or a joint savings account, you can use it to pay off joint debt. You could use a home equity credit line to this end. Credit counselors will be happy to help you make a plan. This is an excellent option because you are killing two birds with one stone.

If the situation is really bad, you may have no choice but to file for bankruptcy. If this is the case, and you have not gotten a divorce yet, you should both file at the same time to keep either one from getting stuck with joint debt.

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