If you’re considering a divorce, you may be thinking about all the things you have to split, from the bank accounts to the house to custody of the dog.
One thing you probably won’t demand is yours? All that accumulated credit card debt. Unfortunately, you’ll need to divvy up credit card debt in divorce just like assets.
But what if you can’t agree on who owes what?
What if your soon-to-be ex was the one racking up the purchases?
What if all the credit was in your ex-spouse’s name and now you have to rebuild your credit along with the rest of your life?
Avoiding the accumulation of additional debt should be your top priority, since divorce itself is expensive (think paying legal fees, furnishing a second household and splurging on a pick-me-up treat).
We don’t have all the answers to navigating the treacherous legal waters of divorce, but we do have simple ways to make smart money decisions so you can divide up old debt, avoid accumulating more debt and get on with your post-divorce life.
How Is Credit Card Debt Handled During a Divorce?
Generally, any debt you incur before getting married is considered separate debt. It’s your responsibility and typically isn’t subject to division during divorce.
But debt accumulated during the marriage is a different story. That’s considered marital debt.
If you live in a community property state, anything acquired during the marriage — including debts — belongs to both spouses, and will generally be split 50/50.
There are nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
Regardless of where you live, you’re generally responsible for:
- Debt that is solely in your name.
- Joint credit card debt that is in both your names. If you and your spouse opened a joint credit card before getting married, you’re both responsible for that debt, too.
- Debt from an account or loan that you cosigned for your spouse, even if it’s not owned jointly.
In community property states, you may also be on the hook for any debt your ex racked up during the marriage — even if your name isn’t on the account and you’re not a cosigner.
The main thing to remember is that you are responsible for any debt in your name. So, regardless of who made the purchase, if the credit card has your name on it, the lender will expect you to pay.
How to Protect Yourself From Credit Card Debt During Divorce
When it comes to debt and divorce, ideally you’d both agree on what belongs to each person. But then again, if you lived in an ideal world, you probably wouldn’t be getting a divorce.
Here’s some practical, money-saving tips for dealing with debt during a divorce.
Deal With as Much Joint Debt as You Can Before You File for Divorce
It may be painful, but consider paying off any joint debts between you and your partner before you file for divorce.
“Once you file for divorce, there’s a lot of rules around what kinds of changes you can make to your accounts, especially if they’re joint debts that you have together,” said Ariel Ward, a certified financial planner at Abacus Wealth Partners.
Leaving your marriage with no joint debt can save you a lot of time and money.
“Pay off as much joint debt as you can before filing for divorce,” said Erin Morse, a family law attorney in Orlando. “If the debt doesn’t exist, it’s not an issue that can be litigated in court.”
If there’s a substantial amount of debt, you and your partner can decide to sell assets to pay it off. In one case Morse worked on, the husband sold the couple’s vacation home to pay off their car loans and student loans.
Deciding who is going to accept which debts and who is going to pay can be uncomfortable. Consider meeting in a neutral place — and a public one, if there’s a chance it could turn ugly — to discuss exactly what the two of you owe.
Remove Each Other as Authorized Users
If you both have your own credit cards, remove each other as authorized users on the cards.
You can usually take care of this in a few minutes by logging into your account or calling your credit card company.
This helps prevent your ex from racking up new debt on your card and avoids sorting out expenses after you split.
Open Your Own Credit Card
You may also want to open a new credit card in your own name after you’ve separated and use it for all your future personal expenses. This will keep your personal debt separate from the debts you accumulated during your marriage.
If you have remaining debt on a joint account you are responsible for, now could be a good time to transfer the balance to your new credit card — look for a balance transfer credit card with a low-interest offer.
Even amid the rancor of a divorce, you can save hundreds or even thousands in legal fees and credit card interest by avoiding petty arguments over smaller bills.
Close Joint Debt Accounts
If you can pay off all shared debt before the divorce is finalized, close your joint credit card accounts. This can ensure your ex-spouse doesn’t incur any additional debt in your name.
You’ll need to contact the credit card company or loan provider and ask to be removed from any joint accounts. Make sure to confirm that request in writing.
Monitor Your Credit Score
Even if you get your ex to agree to pay for part of the debt — whether on your own or due to a divorce decree — keep detailed records of the payments to protect your credit from unwanted surprises.
Request a free copy of your credit reports and check them regularly during and after the divorce.
“Just because the divorce agreement says your ex is going to pay part of that debt, you need to make sure that’s actually happening,” Ward said. “If it’s not, your credit score is going to be the one affected.”
What if Your Ex Won’t Pay Their Debt?
Remember: Any missed payments or default on an account with your name on it will have a negative impact on your credit score. If your ex is missing payments on a joint account, you’re still responsible.
So, what can you do if your former spouse isn’t paying the bills and the credit card company is coming after you?
One option is to petition the court to enforce the divorce agreement, or divorce decree. Your former spouse will then be forced to appear in court and explain to a judge why the order isn’t being followed.
If your spouse isn’t cooperating, continue making on-time payments for at least the minimum amount until things get sorted out in court.
Unfortunately, taking responsibility for your ex’s debt may be unavoidable if the credit card company has your name attached to the account.
“You’re going to have to deal with it somehow,” Morse said. “You can make some arguments against it, but saying ‘I didn’t know they had this much debt’ isn’t a valid argument.”
In other words, if your name is on the loan or credit card, continue making payments — even if your ex isn’t.
Should You Consider Bankruptcy?
Although it may seem like an attractive option — declare bankruptcy so you don’t have to think about the debt you racked up during your marriage — making a rash decision could end up haunting you.
Kelly White, a social worker from New Hampshire and a TPH Community member, separated from her now ex-husband in 2009. They chose to delay filing for divorce when she found out she had cancer and needed to retain his insurance, but they continued incurring the costs of separation.
“We were maintaining those two separate households while I was sick, and [then] I was unable to continue doing my job,” she said. “At that point, we decided to declare bankruptcy before the divorce.”
Although it provided a temporary reprieve from dealing with her ex in regards to their debt, White said she wished she had considered options other than a bankruptcy and its long-lasting consequences.
The hit that your credit score will take from bankruptcy could also endanger your post-divorce life, leaving you unable to get approved for a loan or pass a credit check. White said she ended up having to ask a friend to front her the money for an apartment.
The flip side — and another reason to sort out your credit cards before the divorce — is that your ex could file for bankruptcy and leave you with the liabilities on joint accounts, according to Ward.
“Your ex-spouse could file for bankruptcy post-divorce and then potentially have his or her liability wiped out if you have joint credit together,” she said. “Then you still have your liability plus theirs.”
Get Your Finances in Order
Divorce can be emotionally and psychologically taxing, but you’ll thank yourself later if you can maintain some financial stability.
Although the period immediately after a divorce may be tough, calling your creditors before you start missing bills can help your financial future and save your credit.
Ask your creditors if you can enroll in a hardship program on a temporary basis to reduce the interest rate on the debt. They might even accept a temporary smaller payment for a short period of time.
Ward recommended writing down all of your assets and debts post-divorce so you can physically see where your money is going — and where it needs to go.
For more budgeting ideas, check out these tips for managing your money after going from two incomes to one.
How to Build a Debt-Free Life Post-Divorce
If you left your spouse to handle your finances during your marriage — or you got the unwelcome surprise of debt — you’ll need to start rebuilding your finances along with the rest of your life.
For White, that meant rebuilding her credit and getting a more reliable car. She obtained a car loan with the help of a now-defunct charity. After two years of making regular payments, she felt ready to take the next step.
“So I called the same bank that gave me the car loan and asked for a credit card,” White said. “It started out with a $300 credit card, and I only used it for gas.”
After 18 months, she asked the credit card company for an increase in her credit line. The company gave it to her because of her history of on-time payments.
Although she still only used the credit card for gas, the increased credit limit decreased her credit utilization ratio, which gave her credit score a boost.
Your credit utilization accounts for 30% of your overall credit score.
Stay Positive About Your Financial Future
If you can see past the day-to-day struggles and costs of your divorce, this could be your chance for a fresh financial start.
Cutting back where you can is a good idea when you’re going through a divorce. You’ll need as much wiggle room in your budget as possible.
In the immediate aftermath of her divorce, White said it was really hard for her family to recover from having two incomes to cover debt to having it all rest on her shoulders.
In the end, she’s proud of proving to herself that she could take financial responsibility for herself.
“It was very, very challenging,” White said. “But it was also very empowering because I was the one who was in control of my money.”
Tiffany Wendeln Connors is deputy editor at Codetic. Rachel Christian, a senior writer at Codetic, contributed to this story.