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3 concerns to consider when addressing credit cards in a divorce

On Behalf of | May 7, 2024 | Divorce |

Married couples tend to acquire resources together. They consult one another before buying new vehicles, and they pool their income to buy a home together. They may also take on numerous financial obligations together.

Married couples may share joint credit cards. They may also help one another pay off the balance due on credit cards held separately by either spouse. When spouses begin discussing divorce, credit cards can quickly become a point of contention during that process. As such, those preparing for divorce may need to carefully consider the three issues below when negotiating credit card matters.

What debts should the spouses share?

There is generally an assumption that people should share responsibility for financial obligations taken on during the marriage. Credit card debts from before the marriage are usually not part of the marital estate. In some cases, people keep certain debts out of the marital estate by showing that their spouse lied about the debts that they had or intentionally hid a new credit card. Additionally, debts accrued as a way of diminishing the marital estate or as part of an extramarital may not be subject to division.

Who assumes responsibility for the debts?

Finding a fair way to address credit card debt can be a major challenge. There are a variety of solutions available, but some of them leave people more vulnerable than others. For example, letting one spouse accept responsibility for more marital debt can be a smart choice in some cases, but it does leave the other spouse in a vulnerable position if they are a cosigner on the account. They could be personally responsible if their spouse defaults on payments. People may need to consider every option, including using marital resources to pay off those debts, when addressing credit card balances in a divorce.

Who keeps the rewards?

In some cases, people simply need to close down their shared accounts as part of the divorce, but they may need to handle any accrued rewards before doing so. Spouses may need to specifically address the division of accrued credit card rewards, which could range from free plane tickets to cash-back rewards.

Those who consider the totality of their marital estate can potentially push for more appropriate property division terms in a pending divorce. Thinking about both debts and resources can help people set goals for their divorce proceedings accordingly.