Combining finances during marriage inevitably means that spouses must separate finances when they divorce. They may have accumulated valuable assets jointly during the marriage. They may also have accrued significant financial obligations. Carrying a credit card balance is a common practice, especially when unexpected expenses arise. Divorcing couples may share thousands of dollars in credit card debt.
What solutions can help to protect spouses from future debt-related financial challenges in this regard?
Spouses can settle property division matters
Many couples choose to negotiate property division settlements to retain control over the process. They can agree on a plan to divide their credit card debts. Spouses generally have to split debts taken on during marriage, but it is possible to exclude certain debts in special circumstances.
Each spouse could take responsibility for certain credit card debts or half of the total balance due. Spouses can also use shared assets to repay their credit card debt. The solution allows both spouses to move on from the divorce without any lingering financial obligations.
Spouses need to consider their finances, including what they can afford to pay while maintaining a home on their own after the divorce. They also need to consider the possibility of a default or bankruptcy leaving them responsible for debts their spouse theoretically should have paid. Some people take on more debt to avoid the risk of misconduct or irresponsible behavior causing future credit headaches.
Identifying which credit cards are joint financial obligations can be the first step toward a reasonable property division settlement. Most debts taken on during marriage are marital responsibilities, even if they are only in the name of one spouse. Creative solutions can make a major difference for those thinking about life after divorce.