What happens to credit cards and debt in a divorce?

Amidst the hardships of divorce, one matter that has to be addressed is dividing assets, including financial accounts. Many couples share credit accounts, so what happens to these during a divorce?

Here is how accounts are treated and divided, and also what steps you can take if you are going through or planning a divorce.

Types of accounts

• Joint account

For many married couples, credit accounts are opened jointly. This means that all responsibility of the account is shared between the two, including debt. Creditors do not recognize divorce decrees when collecting payment, so even if you and your partner separate, you are both responsible for the payments of the account.

Often, the judge for the divorce case will split the amount of debt evenly between both people, meaning both of you would be responsible for 50% of the debt after divorce. However, there are instances in which it may be distributed unevenly.

• Account users

Sometimes, a person opens an account and signs their spouse on as an “account user,” which is different than a joint account in which both people own and are responsible for the account. In cases like this, the owner of the account is fully responsible for any debt, even though the spouse can use the money as well. In a divorce, the person primarily in charge of the account is also in charge of all the debt on that account, just as they were before the divorce.

It is important to know what type of account you have and how that could affect you during a divorce.

What to do about your accounts when planning for divorce

If you are filing for divorce, it may be wise to create individual credit accounts. The sooner you figure out your accounts, the better. If you want to change a joint account after the divorce decree has already been settled, it can be a harder and more tedious process. Because creditors do not have to acknowledge divorce decrees, you may have to close your joint account and then completely reapply for a new account individually, rather than simply converting the joint account into individual accounts. If your spouse is an account user on your account, it is smart to open your own individual accounts without your spouse as a user.

Sorting through debt responsibility is a very important step in the divorce process, so understanding how debt could be divided will help you through that process. An attorney can always answer questions and review your case, offering advice on what to do next.

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