Who is responsible for credit card debt in a divorce?
Divorce can bring up many financial concerns, especially when it comes to credit card debt.
One of the most pressing questions is whether you’ll be responsible for your ex-spouse’s credit card debt after the marriage ends. The short answer is that it depends on the state you live in, whose name is on the account and whether the debt was incurred before or during the marriage.
In this article, we’ll discuss these factors and some steps you can take to protect your credit during a divorce.
Am I Responsible For My Spouse's Credit Card Debt In A Divorce?
Whether or not you're responsible for your spouse's credit card debt in a divorce depends on several factors. Below we’ll take a closer look at them to help you determine who pays credit card debt in a divorce.
Common Law vs Community Property States
When it comes to credit card debt, most states follow what’s known as common law property rules. This means that, if the debt is in your name, it’s your sole responsibility to pay it.
However, there are nine states that follow community law guidelines: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Here, both spouses are responsible for all credit card debt acquired during their marriage, no matter whose name is on the account.
Bear in mind that community property states might have some exceptions when it comes to dividing marital debt. For instance, if your spouse used a credit card to fund a gambling addiction, they created debt that only benefited them and not the household.
Individual vs Joint Credit Card Accounts
In a divorce, you're usually only responsible for credit accounts in your name. However, note that you're also legally liable for joint and co-signed accounts where your name is on the credit card agreement.
A divorce decree doesn't replace the agreement between you and your creditors. So, if the court assigns debt from a joint or co-signed account to your former spouse, a credit card company or other creditor can still try to collect payments from you if your ex stops paying it — and this could impact your payment history and credit score.
Still, your divorce settlement should include a division of property that outlines who is responsible for which debts. This document doesn't stop a creditor from seeking payment from you, but it allows you to sue your ex if they don't pay a debt assigned to them by the court.
How To Protect Your Credit During a Divorce
There are several steps you can take to protect your credit during a divorce:
- Pay off your joint credit cards and stop using them to avoid accumulating more debt.
- Consider closing joint accounts entirely. This may temporarily lower your credit score, but it will help ensure that neither of you can incur more charges and the risk of missed payments and other credit-related problems.
- Try to refinance existing co-signed credit cards so that either you or your spouse are solely responsible for them.
- If your spouse is an authorized user on your credit cards, remove them to avoid any unauthorized transactions.
- Changing account numbers on your remaining accounts might be a good idea, especially if you ever store your payment information on your ex's computer or phone.
- Check your credit reports periodically and look for accounts that might've been opened in your name without your consent.
- Freezing your credit report can be worthwhile since it can stop other people from opening credit accounts using your personal information.
- Keep track of spending activity so that you can demonstrate who is responsible for certain debts during divorce proceedings.
- Consider seeking advice from a credit counselor or a financial advisor to help manage your personal finances during and after the divorce agreement.