As if divorce wasn’t enough to deal with as it is – there are a number of financial considerations you must make during what is a very emotional time. If there is credit card debt, it is common for the debt to be assigned to one of the parting spouses during the divorce – but did you know that if your name is on the credit card, even if the card is assigned to your ex you can still be held liable for it if he or she doesn’t pay the bill?
Even though a divorce judgment will assign debts to one party or another to take care of, creditors are not required to follow the divorce judgment. If a couple is married when the credit card debt is created, then legally a creditor can come after either partner for the payment, regardless of who is given the responsibility of that particular debt during the divorce judgment. Before your divorce judgment, get a copy of credit reports for each person so that you can ensure there are no “surprises” as to credit card bills or other debts. Creditors are not obligated to respect the terms of your divorce judgment when it comes to payments.
When a credit card has both spouses names on them, you will want to remove your name from the account if it’s being assigned to your ex; or close the account completely so that it can no longer be used (although it will still need to be repaid). Removing your name from the credit card account does NOT relieve you of the debt created before the divorce takes place; but if the spouse continues to use the credit card from that point on, the new debts will not be your responsibility if they don’t keep up with the payments. If you don’t ensure that your name is removed from joint accounts that your ex will continue to use after you divorce, lack of payments will also be reported on your credit report – it really is in your best interest to get your name removed from them during the divorce.
If a credit card will not allow one person’s name to simply be removed, or to remove the risk of having to pay for the account later if the assigned spouse doesn’t make the payments, is to have the person who is assigned that particular card apply for a new credit card. Once open, transfer the balance from the joint account to the new card, and then close the joint account. When the money is transferred from the old account to the single-name account, it is the legal responsibility of the person who’s name is on the account (the spouse assigned the debt during the divorce). If they don’t keep up with their payments, at that point it is no longer the legal responsibility of the other spouse.
Related Content:
- Credit Cards Calling The Shots In response to a recent article on credit cards closing accounts, a Frugal Dad reader (we'll call him John) submitted the following scenario and question. I told him I'd answer his question here with his...
- Eliminate Credit Card Debt Have you recently decided to eliminate credit card debt from your personal finances? Although it may seem like a lofty idea, you should know that it is definitely an achievable goal. You just have to...
- After 16 Years, A Credit Card Account Gets Closed Without My Knowledge. Since 1993, when I was still in college, I have had a credit card with a certain company. Right now they call themselves FIA/IBS, but over the years they have been called various things. Well,...
- Weekly Roundup: Credit Card Use Stings Edition Now that we have paid off a number of debts, including most recently our car, we have decided to use one of our two remaining credit cards as a dedicated gas card. It has a...
- My Final Credit Card Payment Coming Due Today is a feel good day. The last remaining credit card I have with a balance has been set to "pay in full" as of next month. Come the 9th November I will be credit...
Recent Comments