A lot of property division law amounts to debt division for many American couples. Illnesses, layoffs and poor purchasing decisions can leave you and your soon-to-be-ex mired in debt. Since many people turn to credit cards to pull them through lean times, you may find yourself facing credit card issues in the property division phase of your divorce. How this plays out will depend upon how your state divides marital property and debt.
Debt Division
States divide marital debt under the laws of either community property or equitable distribution. The main difference is that community property states mandate an equal division of your estate, whereas equitable distribution states seek a division that is equitable, or fair. Since fair and equal aren't always the same, equitable distribution laws allow for an unequal division under some circumstances. Therefore, if you live in an equitable distribution state, you may find yourself receiving more debt and less property than your spouse even though many of the credit cards you end up with are in the other spouse's name.
Marital Versus Separate Debt
Not all credit card debt is subject to division in your divorce case. One thing both equitable distribution and community property states have in common is that they allow family courts to divide only marital debt, not separate debt. The definition of marital debt varies from state to state, but as a general rule, it consists of all debt acquired by either party between the date of marriage and either the date of separation or some other end date set forth in state law. Everything you racked up before marriage and after that critical end date is exclusively your problem. The same rules apply for your ex.
Effect Of Your Ex's Credit Card Debt
If your ex incurred credit card debt during the applicable time period set forth in your state's property division laws, you could be ordered to share in it. You may succeed in having it classified as separate if he racked up the debt in bad faith, but if it arose in that critical time period, the burden will be on you to show why the court shouldn't include it as part of your marital estate. His debt may have the additional effect increasing your alimony exposure. Alimony in most states depends partially upon the dependent spouse's need for support. Debt service obligations increase that need.
If Your Ex Files Bankruptcy
Depending upon the facts, your ex's bankruptcy could help you; it lowers your alimony exposure, and if she doesn't properly serve you with notice of the bankruptcy, your property division claim could survive discharge. If she includes joint accounts in bankruptcy, however, the creditors will now look to you for payment. If she files Chapter 13 and serves you with notice, you may be out of luck; your case will be better if she files for Chapter 7. Regardless, don't try to go it alone; if your ex files bankruptcy, see a lawyer immediately.
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