There are many property division issues that spouses need to address as they negotiate the terms for a divorce. People often prioritize the retention of key assets, such as their houses and retirement accounts.
However, they also have to divide their shared financial obligations. Credit card debt can put significant pressure on a household budget. Generally speaking, any debts taken on during the marriage are part of the marital estate, even if the account is solely in the name of one spouse.
Particularly when spouses have uneven earning potential, there may be reason to worry about who needs to take responsibility for credit card debt. What solutions are available for shared financial obligations, including credit card balances?
Couples can create customized arrangements
In some cases, each spouse might agree to take responsibility for a certain percentage of the overall credit card debt for the family. Spouses may base the division of debt on the income of each spouse or on which marital assets they want to retain.
It is important to note that a property division settlement in family court does not protect the other spouse from collection efforts. If the spouse who agrees to pay one account defaults or files for bankruptcy, the other spouse could face collection efforts.
Some people prefer to liquidate marital assets to fully repay shared debts so that both spouses can start with a clean slate after divorce. If spouses cannot reach an arrangement that they both agree is fair, then a judge may make the final decisions regarding responsibility for credit card debts.
Learning more about what happens during property division proceedings can help people protect themselves. Credit card debt is an important consideration for those preparing for divorce.