Credit Card Debt after Divorce

When we get married, we hope to live happily together ever after. However, our life is not a fairy tale. Researches show that the half of all marriages ends in divorce. Financial issues are among the main concerns of divorcing couples. Most people, even if they start out with separate credit accounts, eventually combine their money. While going through a divorce, splitting off financially from the ex-spouse becomes one of the main targets. If financial aspects are settled before separating, then the end of your love story will be less painful. But if there are unsettled financial debts, life can become difficult.

When you are considering divorce, pay a close attention to your credit accounts. There are two types of credit: individual and joint. Individual account means that you alone are responsible for paying off the debt. The account will be listed only on your credit report or on the credit report of an "authorized" user. Joint account means that you and your spouse are responsible together for paying debts. A credit company will report your payment history in both names.

Individual credit accounts make financial separation easier. You and your ex-spouse will stay with your own debts. Joint accounts will remain the joint responsibility even after divorce. By law, credit card issuers can't close a joint account because your marital status has changed. However, they can do it on your or your spouse's request. Close your joint accounts as soon as you know your marriage is ending in order to stop accumulating debt.

As long as there's an outstanding balance on your joint credit card, you and your spouse have to make regular payments. Actually the spouse who didn't spend money is not liable to pay. However, the credit card company may legally require you to pay the debt if your spouse defaults. The creditor is not bound by your divorce judgment. You signed the credit card agreement, so you are responsible for this credit card too. Late payments made by your spouse will also appear on your credit report.

There are some smart things to do with your debt when you are going through a divorce:

• Sell any joint asset to pay off the debt on a joint credit card. That's why it is important to settle down your financial issues before you split.
• Separate joint accounts. Apply for a credit card for each of you and transfer agreed-upon amounts into these separate accounts from the joint debt accounts. If your spouse can't get approved for a credit card on his own, get one of his relatives to co-sign on a new plastic.

• Seek the advice of a reputable credit counseling service. Good credit counselors can greatly help you get back on your feet. They evaluate your financial situation and develop an appropriate debt management plan based on your spending pattern.

Managing the financial issues responsibly can make your separation less disagreeable. People who decide to divorce generally focus on the past and present. Planning your financial future prior to divorce proceedings will help you to avoid financial crises or bankruptcy.

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