Dividing Credit Card Debt During a Divorce

You were once happily married. You and your spouse shared everything, including your credit cards. You didn’t want money to be a big problem in your relationship so you just both used the same cards and dealt with the bills when they came in and tried not to think about it too much. But the marriage went sour and now that you’re in the middle of a divorce, you’re not too thrilled about the fact that you’ve got all of this credit card debt under your name that was really from purchases that your spouse made. What can you do about it? This is an increasingly common problem so there are more and more solutions in place for couples that are dealing with it.

Here are some of the things that you need to do to divide debt (and avoid future shared debt) when in the midst of a divorce:

• Try to work out an amicable agreement with your spouse regarding who is responsible for paying off which portion of the debt. This isn’t easy; dealing with money issues is tough even in the best of relationships. However, it makes the rest of the process go a lot more smoothly if it can be done. Sit down, calmly, with an organized file of the expenses and see what can be resolved.

• Bring in mediators. If you can’t resolve this on your own, you’re going to need to get your lawyers to resolve the issue with you. Come to the table with clear records of what the expenses were that caused this debt. Highlight all of the debt that you feel solely responsible for (your husband really doesn’t need to pay for your $500 shoes) and mark all of the debt that you feel partially responsible for. This will be a good starting point for the mediators to assist you in reaching a final decision on who pays what.

• Get it in writing. You want to make sure that the final decision on who pays what is going to be legal so write it into the settlement agreement. Make sure that you include a clause about what legal actions can be taken against your spouse if he fails to hold up his end of the bargain and causes harm to your credit rating.

• Contact the creditors together and ask that the debts be legally transferred to the individual who is going to be responsible for them. Some creditors will refuse and continue to hold you both liable but most are used to this situation and will be amenable to the transfer of liability.

• Put a “hard close” on the account. You can’t close a credit card account that has outstanding debt but you can do a “hard close” which means no new charges can be made. This is a smart move when divorcing to avoid additional debt from being incurred.

Make sure to take responsibility for making on-time payments regarding your own portion of the debt. This will allow you to avoid future legal issues with your spouse and will also help you to build good credit as a single person.