Addressing financial matters is often one of the biggest challenges during divorce. For example, spouses often fight over retirement accounts and real property. In addition to dividing their assets, they also have to divide their financial obligations.
Many married couples have joint credit cards. Each spouse may also have accounts in their own name, which are technically part of the marital estate. Credit cards can easily become complicating factors during divorce proceedings.
What credit card issues frequently arise during divorce?
1. Disputes about which debts are marital
Some couples divorce due to financial infidelity. One finds out that the other has spent shocking amounts of money and accrued debt without telling the other. Other couples divorce due to romantic infidelity. A cheating spouse may have accrued hundreds of dollars in debt trying to hide their affairs. Spouses may find themselves disagreeing about which credit card balances actually belong in the pool of marital assets and debts.
2. Rewards balances
Many of the best credit cards offer financial rewards for regular use. People may be eligible for free plane tickets or may have accrued hundreds of dollars in credits that could reduce their balance or offset online purchases. Spouses may have to check their rewards accounts on each of their credit cards and then include any accumulated rewards in the pool of marital assets to address them fairly.
3. Fear of future defaults
Simply splitting credit cards between spouses may not be an effective solution. Even if there is a court order that identifies one spouse as the party responsible for paying, the other could still be at risk of collection activity and even creditor lawsuits. If the spouse responsible for credit card debts defaults, dies or files for bankruptcy, the other spouse may end up in a very difficult financial situation, possibly years after the divorce. Some spouses protect themselves by taking responsibility for more credit card debt, which can influence the outcome of other key property division decisions.
There are many ways to effectively address credit card balances during divorce, and people who know what to expect can do so effectively. Reviewing statements from credit card providers with a skilled legal team can be the first step toward an appropriate property division settlement.
