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Credit Card Debt in Marriage: A Marriage Killer

How to divorce-proof your marriage by tackling debt together.

Here is what I wished everyone would know about credit card debt in marriage. If one spouse is the Owner of the credit card and the other is an “an authorized user” only (with a separate card), the debt accrued by the other spouse only goes on the credit history of the Owner spouse. In case of divorce where the other spouse refusing to pay for what they spent – the Owner spouse is on the hook with the bank for the entire balance. 

πŸ™ŒAre both spouses equally liable for joint credit card debt, even if one spent a lot more than the other?

If both spouses were owners/applicants for a joint credit card, even if one spouse NEVER used their card, in NY – they would have to equally split the debt and each is responsible for owing 50% of the debt on that joint credit card.

πŸ’Έ How is credit card debt handled in divorce?

Credit card is handled in divorces as follows:  Debt in separate spouses’ names remains separate unless you can prove that the money spent using the debt was used for joint marital purpose (like if the husband maxed out his credit card and used the money to do home renovations on the den). When splitting assets, marital debt is subtracted from the value of the assets and then the remaining value is divided between the spouses. 

πŸ€¦β€β™€οΈ What if marital debts are much higher than the marital assets?

In my practice, I had several cases where the marital debts were much higher than the marital assets. In these instances, we could not finish the cases for a long time because the spouses would not agree to split the debt. They would essentially walk away from the marriage with NEGATIVE BALANCES, owing money.

πŸ‘©β€πŸŽ“πŸ‘¨β€πŸŽ“How does student debt work in marriage and divorce?

Even if your spouse took out student loans during the marriage, and you helped your spouse pay down all or part of their student loan, a student loan never becomes a marital debt. This will remain with the spouse who originally took out the student loan and went to school. So, individual student loan remains the obligation of the student spouse alone.

βš– How do you divide debt in a divorce?

It’s not always easy to divide debt because, for example, one spouse may want to remain in a house that’s mortgaged. The mortgage and home equity lines may be higher now (if they weren’t paying them for a while and interest and fees accumulated) than the house is worth.

It will be difficult to get the spouse is living in the house and wants to remain there to leave and sell this marital home where the parties will walk away with nothing after the sale (and even get the 1099 Miscellaneous from the bank for the balance of the loans the banks had to take a loss on in short sales). As long as the spouse who lives there remains in the home, he or she is living there rent-free in their own home. However, a sale will bring them no benefit in that situation; it’s very difficult to get them to leave or to agree to sell the property in a divorce.

Credit card debt that could be in one spouse’s individual name could be very high and the other spouse may not want to accept sharing in that debt and will dispute heavily that the money was used for marital purposes, claiming that they got no benefit from the money spent and therefore the other spouse should alone be liable.

If you’re looking to take care of a complex situation in your divorce, look no further.

Call Shepelsky Law Group

Tel☎ 718-769-6352

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