How will your credit card debts be affected by divorce? The answer may not be as simple as it sounds, as it depends on a variety of factors — both personal and statewide. Here's what you need to know about the most common types of credit card debt.
1. Credit Cards In One Name Only
Generally, your credit card company will hold you liable for debt taken out in your name. However, how the court views it depends on the state in which you live. Residents of community property states generally consider both parties equally liable for marital debts regardless of whose name is on the contract. Common law states, though, usually hold you liable for debts in your name only.
2. Credit Cards From Before the Marriage
Assets and debts taken out before your nuptials are usually considered separate property. Separate, or individual, property was not used for the benefit of the household and came from sources outside the marriage. So, if you or your spouse had a credit card with a balance they charged as a single person and which they paid only with their own funds, it may not be the other spouse's problem at all.
3. Joint Credit Cards
Both common law and community property states hold both parties equally liable for credit card debt taken out jointly. These debts are initially assumed to be for the benefit of both parties, even if only one of you used the card. Unfortunately, the divorce court cannot alter the contract you signed with the credit card company, so you may be legally liable for payment even if a judge assigns the debt to the other person.
4. Credit Cards With a Co-Signer
Co-signed debts — for which a person agrees to pay off if the primary debtor doesn't do so — are usually treated like joint debts. Although your card is technically in one name, the co-signer legally obligated themselves to pay the balance, so they will be held to that by the divorce court.
Where to Learn More
As with most assets and debts held when a couple files for divorce, the ultimate fate of credit cards depends on many different things. And because many couples' financial situation is not cut-and-dried, your personal division of assets may not look like the standard for your state. Exceptions are always possible.
The best place to start is by learning more through a consultation with an experienced divorce attorney in your state. They will help you understand the state rules, analyze your particular debts, and build a case regarding special circumstances involving those debts. To learn more information, reach out to a company such as Gomez May LLP.