Couples often concentrate on property division when they divorce. But any debts that spouses accrued do not disappear with their marriage.
You may be liable for joint debt regardless of any decree. A decree does not change the contracts you have with lenders.
Make a list of all debts including:
- Credit cards
- Vehicle loans
- Student loans
- Personal loans
- Legal costs
- Tax debts
- Any loans
Next, assign responsibility for the debt. The difficulty of assigning responsibility depends on the debt.
Student loan debt is usually attributed to the student. A vehicle loan may be assigned to the spouse who ultimately owns the vehicle.
Other debt, such as credit cards, may be more difficult. Many cards have joint responsibility, but some spouses use their individual cards to pay family expenses. Spouses are jointly responsible for debt acquired in their marriage if they are both credit card co-signers.
Set a deadline on ending joint debt. This is typically the date of physical or legal separation. Note the debt balances on this deadline.
The spouse who made the purchases is responsible for that credit card debt after separation. But it is safer to use separate cards.
Close joint credit card accounts if you can. This helps prevent your spouse from making purchases and accruing debt in your name. Establish a new credit card account in your name after separation to separate your non-martial debt from marital debt.
Have your name removed from joint accounts that your spouse will still use. This will not erase your liability for debt accrued to that point but should end any responsibility for future debt. Revoke your spouse’s signing authorization for any of your accounts.
Continue to pay all credit card minimum balances that are in your name even if you challenge liability. Otherwise, your credit score and history may be compromised.
Spouses may agree to take these steps to address joint credit card debt:
- Transfer parts of joint debt to individual cards and cancel joint cards.
- Use joint savings to pay off debt.
- Sell a vehicle or other asset to pay debts.
- Use a home equity line of credit in a jointly owned home.
- Have a spouse assume liability for a debt in return for keeping an asset.
- File for joint bankruptcy for overwhelming debt.
Obtain a copy of your credit report. This helps assure that any outstanding debts are assigned to a spouse.
Attorneys can help spouses deal with these issues. They can assist them in negotiations and proceedings.