Credit Card Debt

What to Do with Credit Card Debt in a Divorce

Many divorcing couples have questions about credit card debt. Who is liable for it? How will it be divided?

As a general rule in North Carolina, property acquired during the marriage is presumed marital and is divided equally between the parties.  However, debt is treated differently.  There is no presumption that debt acquired during the marriage is marital.  North Carolina courts will exclude debt from the marital estate unless a party can prove it was incurred for the joint benefit of the parties.  That being said, if there is evidence of actual benefit to the marriage, the debt will most likely be deemed marital.  Even so, if the credit card debt is deemed marital, a judge may not order the debt split directly down the middle. Likewise, if you and your spouse reach a settlement outside of court, you will have broad discretion in determining how the debt is divided.

Below are some options to consider when dividing credit card debts that benefited the marriage:

Keep the debt in your sole name:

If the credit card is in your sole name, even if most of the debt was acquired by your spouse, consider keeping the debt. You can make up for it by taking an extra share of the marital assets equal to the credit card debt. 

This is an advisable strategy for several reasons.  First, if the card is in your name, the credit card company will hold you liable for the debt no matter what arrangement you and your spouse reach.  Second, If you and your spouse agree your spouse will be liable in the settlement agreement but he or she doesn’t pay, you will still be held liable by the credit card company.  While you should be able to enforce the settlement agreement through lengthy litigation, the headache will not be worth it. Plus, there is the possibility you may not be able to collect on any judgment entered against your ex-spouse.

Pay off joint accounts as quickly as possible:

Joint accounts should be paid and closed as soon as possible.  This will protect you in the long run by decreasing your risk of liability connected with depending on your ex to help pay off debt.  Consider using joint savings account funds to pay off joint credit card accounts at the time a settlement is reached.

Speak to an attorney asap if you discover a secret credit card account:

If you discover a secret credit card account, it’s possible the debt was not used to benefit the marriage.  An attorney can advise you on your rights and help make sure you are not liable for this debt. Moreover, this debt may be a sign your spouse has been engaged in financial marital misconduct such as reckless spending or wasting of assets.  If that is the case, you should speak with an attorney asap to protect your interest in the marital estate.

If you’d like to know more about your rights when it comes to credit card debt in a divorce, contact our office today to speak with one of our knowledgeable family law attorneys.

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