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Dividing credit card debt in divorce

You may feel you are making a break to financial safety when you divorce. But first, there are debts to be paid.

Division of property includes negative assets – debt – along with positive assets. This can be good for you, if it was you who ran up the bills. Or it can be very distressing, if you must now pay half of the bills that were run up – or all of them.

Your creditors don’t care if you are splitting up. The two of you are equally on the hook for any credit cards or unpaid joint loans. Be certain those creditors will come after you for payment, no matter what the divorce decree may say.

The fact is, a great deal of financial damage has already been done. Your first course of action, now that you are divorcing, is to keep debts from growing even bigger.

Know what you owe

If you have not done so already, research your credit card accounts. Find out if you are the primary account holder or an “authorized user.” The primary account holder – which may be you, your spouse or both of you jointly – is responsible for the debt.

Primary account holders should have the authorized account holder removed from the account. With jointly held accounts, the best you can do is have the account frozen, so your spouse does not run up the bill. Then you should pay off the balance and close the account.

The best way to minimize debt issues in division of assets is to minimize the debt itself. Many couples do this by taking the proceeds of the house sale – also a part of division – and applying some of it to credit card companies.

Beware of bankruptcy

It is a good idea to protect yourself against your partner declaring bankruptcy. If they file for Chapter 7 or Chapter 13, their debt will be whisked away, leaving you holding the bag. One way to prevent this is by designating in your divorce agreement that the debt is a support obligation, like alimony. Bankruptcy proceedings will not discharge that debt then.

There are many kinds of debt to be divided, secured as well as nonsecured. For information on these debts, consult an experienced family lawyer.

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