Credit Cards in Divorce

If you are thinking about divorce, keep close tabs on your credit cards. Paying them off can be a bone of contention both during and after divorce proceedings. If you can't pay them off right now, make sure that your divorce decree specifies who is responsible for them after the court finalizes your divorce.

Financial Responsibility Laws

While most couples work out a financial settlement out of court with the help of their lawyers, if your divorce case goes to trial, your judge will divide your property and debts according to the principles of equitable distribution or community property, depending on state law. In most states, spouses who take out credit cards in their own names are solely responsible for their repayment, while jointly-held cards are the responsibility of both spouses, regardless of who actually used them. However, in community property states, both spouses may be responsible for debts incurred by either spouse.

Financial Discovery

As part of the divorce process, you'll have the opportunity to examine your spouse's finances. Called "discovery," both you and your spouse are required to turn over financial records to each other's attorneys. Information about any credit cards held by either one of you is revealed at this time. While some states may let you waive this process, it provides you with significant protection against surprise debts that may affect you during, and after, your divorce.

Creditors After Divorce

If your spouse agreed to pay off jointly-held credit cards as part of your divorce agreement, be sure to keep tabs on whether or not she is upholding her end of the agreement. A divorce decree is a binding agreement between spouses, not between spouses and creditors. Creditors are not bound by the terms of your divorce decree, so if your spouse agreed to pay off your debts but then files for bankruptcy, the creditors can come after you. Your only recourse may be to sue your ex for violating your financial settlement agreement.

Paying Off Credit Cards Before Divorce

Talk to your lawyer about your outstanding credit card balances. It may be worth it to pay them off completely to avoid ongoing problems after the divorce. However, don't go borrowing from your retirement account or wipe out your savings account to do so without getting permission from your lawyer. Any significant financial transactions, even if intended for the repayment of debt, could be regarded as dissipation of assets by the court, causing further problems for you.