Emily Jenkins asked:
When it comes to credit card debt in a divorce, negotiations are usually conducted to assign a portion of the debt to each spouse. Measures also need to be taken to guarantee that any credit card debt incurred by one spouse or failure to pay existing debts by that spouse don’t affect the other after the divorce.
In general, both spouses are liable for any debt incurred during the marriage, if both are co-signers on the credit card. In non-community property states, if the credit card is in one spouse’s name and the other is an additional cardholder, only the spouse whose name is on the card will be responsible.
The exception to this rule is in community property states, which are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin, where both spouses are liable for debt incurred by just one partner.
When deciding to separate, determine if your state requires that separation be made legal in order for the responsibility of debts be separate, as well. Some states define that point as the moment spouses cease to live together and others define it some other way. Look into that to prevent one spouse from running up credit card debt during the separation before the divorce.
To make sure that all existing debts are accounted for during the divorce process, the credit scores of the two individuals should be obtained. This ensures that there are no hidden debts in existence that both people may be held accountable for later on. There is a need to make sure that all the debt is known and assigned to a particular spouse during the divorce proceedings.
Remember, creditors are not bound by agreements made in divorces. They are eligible to go after either spouse when it comes to collecting on a joint debt. So, separating joint debts onto separate, personal credit cards is highly recommended.
In order to guarantee that you are not responsible for any additional debts incurred after the divorce, be sure to cancel any joint credit cards. At the very least, make sure to remove your name from those cards, which will end your liability for the debts accumulated on them after the divorce. Also, make sure to cancel your spouse’s authorization to any accounts specifically in your name.
To protect against your ex defaulting on debt’s allocated to him/her in the divorce or filing for bankruptcy, certain language should be included in the divorce judgment. A “hold harmless” clause should be included that protects one spouse from the other attempting to shift responsibility of a debt from him or herself.
Also, including an “indemnification” clause will allow a spouse who suffers from the lack of payment of the other to collect any losses incurred because of the default. Such losses include any payments made toward the debt or legal fees incurred in defending against a collection or incurred to force the other spouse to court to honor the divorce judgment.
When it comes to credit card debt and divorce, the main piece of advice is to eliminate any joint debt and turn it into personal debt. This ends your liability for your ex’s debt at the time of divorce. It’s possible to make some sort of arrangement in the divorce for the payment of these joint debts, but you’ll be forced to take your ex to court if s/he doesn’t honor it.
Get rid of the headache and the stress; get rid of joint debt during a divorce.
Gloria
When it comes to credit card debt in a divorce, negotiations are usually conducted to assign a portion of the debt to each spouse. Measures also need to be taken to guarantee that any credit card debt incurred by one spouse or failure to pay existing debts by that spouse don’t affect the other after the divorce.
In general, both spouses are liable for any debt incurred during the marriage, if both are co-signers on the credit card. In non-community property states, if the credit card is in one spouse’s name and the other is an additional cardholder, only the spouse whose name is on the card will be responsible.
The exception to this rule is in community property states, which are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin, where both spouses are liable for debt incurred by just one partner.
When deciding to separate, determine if your state requires that separation be made legal in order for the responsibility of debts be separate, as well. Some states define that point as the moment spouses cease to live together and others define it some other way. Look into that to prevent one spouse from running up credit card debt during the separation before the divorce.
To make sure that all existing debts are accounted for during the divorce process, the credit scores of the two individuals should be obtained. This ensures that there are no hidden debts in existence that both people may be held accountable for later on. There is a need to make sure that all the debt is known and assigned to a particular spouse during the divorce proceedings.
Remember, creditors are not bound by agreements made in divorces. They are eligible to go after either spouse when it comes to collecting on a joint debt. So, separating joint debts onto separate, personal credit cards is highly recommended.
In order to guarantee that you are not responsible for any additional debts incurred after the divorce, be sure to cancel any joint credit cards. At the very least, make sure to remove your name from those cards, which will end your liability for the debts accumulated on them after the divorce. Also, make sure to cancel your spouse’s authorization to any accounts specifically in your name.
To protect against your ex defaulting on debt’s allocated to him/her in the divorce or filing for bankruptcy, certain language should be included in the divorce judgment. A “hold harmless” clause should be included that protects one spouse from the other attempting to shift responsibility of a debt from him or herself.
Also, including an “indemnification” clause will allow a spouse who suffers from the lack of payment of the other to collect any losses incurred because of the default. Such losses include any payments made toward the debt or legal fees incurred in defending against a collection or incurred to force the other spouse to court to honor the divorce judgment.
When it comes to credit card debt and divorce, the main piece of advice is to eliminate any joint debt and turn it into personal debt. This ends your liability for your ex’s debt at the time of divorce. It’s possible to make some sort of arrangement in the divorce for the payment of these joint debts, but you’ll be forced to take your ex to court if s/he doesn’t honor it.
Get rid of the headache and the stress; get rid of joint debt during a divorce.
Gloria
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