Divorcing couples have often spent years sharing their homes. Not only have they combined their incomes, they may have taken on joint debt. Many married couples have shared credit cards. Even if each spouse has their own separate credit cards, they may have taken on credit card debt with the intention of supporting the family unit.
Those debts can then play a role in the equitable distribution process required during divorce proceedings. Credit card payments can put a lot of pressure on a budget, making credit card debt an important consideration during divorce negotiations.
What typically happens with credit card balances during divorce?
Debts are often subject to division
Spouses have to consider their debts when dividing property. The equitable distribution process requires a review of both debts and assets. Spouses have to make disclosures to one another about all of their property and income. They also have to perform a thorough accounting of all major outstanding debts.
In most cases, credit card balances accrued during the marriage are part of the marital estate. Both spouses may have a degree of responsibility to cover those debts. Exactly how they divide those debts can be drastically different from one case to the next. In cases where people worry that their spouses may file for bankruptcy or default on credit card payments, the best solution might involve using marital assets to pay the credit card debts in full if possible.
For some people, excluding certain debts from the marital estate may be possible. People can establish that their spouse wasted money by accruing unnecessary debt immediately before filing for divorce. They may also be able to exclude debts taken on in secret or while conducting an extramarital affair.
Spouses may have to divide their debts or factor in the value of credit card debt when making decisions about the allocation of marital property during the divorce. As with any other economic matter, spouses have the option of settling the issue with one another or litigating so that a judge makes the final determination.
Understanding how credit cards can affect the equitable distribution process can help people prepare for divorce. There are many different solutions available for those concerned about credit card balances and the overall property division process.