Divorce and Credit Card Debt: Understanding Your Responsibilities

jeff.wilson1.cpa • May 25, 2023

In the midst of a divorce, the division of assets and debts can often lead to heated debates. Credit card debt, in particular, can be a contentious issue. Many people mistakenly believe that if their name is not on the account, they are not responsible for the debt. However, it's crucial to understand how credit card debt is handled during divorce proceedings to avoid unnecessary complications. 


First and foremost, it's important to recognize the concept of marital property. In most cases, marital property includes any assets or debts acquired by either spouse during the marriage, regardless of whose name is on the account. This means that if a credit card was used for the benefit of the marriage, both parties may be held responsible for the debt, regardless of whose name is on the card. 


For instance, consider a situation where one spouse acquires a credit card during the marriage and both spouses use it for household expenses, groceries, and other joint needs. In this case, the debt is likely to be treated as marital debt, and both spouses will share responsibility for it. 


However, the specifics of marital property can vary by state, and judges have discretionary power in making final determinations. Factors such as the nature of the asset or debt, when it was acquired, and the individual circumstances of the couple may be considered in the decision-making process. 


To illustrate, let's take the example of a house owned by one spouse prior to the marriage. If the couple lives together in the house during their marriage, it may be considered marital property, regardless of whose name is on the title. On the other hand, if the spouse who owned the house before the marriage maintains a separate residence and the couple does not use the house as their marital home, it may retain its status as separate property. 


In my own divorce experience, my ex-husband and I had to address credit card debt. Despite his claims that he was not aware of the card and should not be responsible, the debt was deemed marital because it benefited our household during our marriage. To support my case, I provided bank statements showing out-of-state travel expenses while he used the card locally. This evidence helped establish that we both used the card during the same time frame. 


To navigate credit card debt during a divorce, it is crucial to consult with professionals who specialize in divorce law and finance. A divorce attorney can provide guidance and help you understand the specific laws in your state. A divorce financial analyst can assist in evaluating your assets and debts, ensuring a fair distribution. Additionally, seeking advice from a personal financial advisor can help you plan for your financial future after the divorce is finalized. 


In conclusion, credit card debt can be a complex issue in divorce cases. Understanding the concept of marital property, consulting professionals, and gathering evidence can greatly assist in reaching a fair resolution. By being well-informed and seeking expert guidance, you can navigate the challenges of credit card debt during divorce and secure a stronger financial future.

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By jeff.wilson1.cpa July 18, 2023
Most would argue that you can’t put a price on certain things. For example, family or health could be considered priceless things. However, some situations will challenge you with the question how much is this priceless item worth to you? Before moving out and separating from my Ex-husband, we had two loving dogs, a reptile, and a cat living in our home. I left with the cat, the reptile, and one of the dogs. Some may say I was fortunate to take as many animals as I did, and it was more than fair for my Ex to keep one of the dogs. Perhaps this may be true as a business transaction, but emotionally I was torn and felt it was unfair. When it came time to file for divorce, the question presented itself, how much did I love the dog I left behind? How much will I spend on lawyer fees to get the dog back? The short answer to both questions a lot! I knew deep down the dog would receive better care from me. I cared for the animals as if they were my kids, raising them all from their baby stage. I worked from home, so I and the dogs spent a lot of time together in my home office (especially during the potty-training phase). I discussed with my lawyer all the potential outcomes for her return or not, how long it could take, and how the courts treat these circumstances on average. Thus, I took my chances and filed my divorce for the dog to return to me and left it to the universe to decide the outcome. However, like other marital property the decision for who keeps the dog, and other property is at the discretion of the judge. The contention I had to keep the dog was the current living circumstances for us. I primarily sustained the household and maintained a stable job, as he was mostly unemployed during our marriage. I was prepared to show in court proof of all the expenses paid and the care for them was predominantly from me. From pet store expenses with toys, food, and training, to vet expenses all paid by me with a copy of the bills. I was prepared to go as far as to ask former associates I met frequently at the dog park to give statements on my behalf of the level of care I gave the dogs. I spent a total of $3,368 in lawyer fees for my dog to return home to me and her other furry family. Others are not as fortunate to afford that expense for one item in a divorce settlement, so you must ask yourself, how much can you afford to spend on it? Be honest with yourself about what you can afford because people make the mistake of exhausting their finances to fight their spouse in a divorce since it’s available to use now. For example, using a credit card to pay for their legal fees, which in the long term becomes more expensive from the applied interest rate over time. Perhaps the use of the credit card could be better spent on bills if the estranged spouse doesn’t work and is a homemaker. An individual should consider the long-term impact of their money spent now in divorce versus money they know needs to be spent later. The cost of want in a divorce should not jeopardize their sustainability for future expenses. It is always recommended to discuss the best financial option with a divorce financial expert and divorce attorney to understand the long-term impact of their finances.
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