What happens to credit card debt when we get a divorce?
Q. Hello. My husband and I are going to divorce. We have approximately $10,000 in credit card debt in my name alone. I do the shopping and paying the bills and that was for house business, not clothes shopping or anything like that. Should I be the sole owner of this debt? What can I do?
A. We are sorry to hear of your divorce.
This is a common concern for divorced couples who have kept their bank accounts and credit cards separate during the marriage.
Often marital expenses are split and the couple will pay for them separately from their own bank accounts, said Amber Leach, certified divorce financial analyst at Equitable Advisors/RICH Planning Group in Morristown.
“One spouse can pay the mortgage while the other spouse pays all incidentals,” she said. “Even though they’re married, they feel more comfortable keeping accounts separate and using a divide-and-conquer approach to paying the bills.”
Ownership of assets cannot exempt accounts from fair distribution, said Leach.
She said fair distribution is where the parties look at each asset and liability and decide what the distribution will be – basically who gets what.
All assets and liabilities accrued during the marriage can be included in an equitable distribution, regardless of title to the asset, Leach said.
“Exceptions to this rule are gifts, inheritance and any pre-nuptial assets that have been completely severed from the marriage.” Completely separate is the key here, which means no mixing of funds,” she said. “You cannot deposit an inheritance in a joint account that you use to pay spousal expenses and expect it to be separated.
Your concern is that you have credit card accounts and debts that accrued in your name during the marriage that were used to pay marital expenses.
Even if titled in your name alone, they may be included in fair distributionLeach said.
“This debt will be part of an equitable split and during the divorce process you can decide how to divide this debt between you and your ex-spouse,” she said. “You should consult your own qualified legal counsel before considering any course of action.”
Send your questions to [email protected].
Karin Price Mueller writes the Bamboos column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. To find NJMoneyHelp on Facebook. Register for NJMoneyHelp.comit is weekly e-newsletter.