Even with two incomes, many married couples accumulate a significant amount of debt during marriage. If they divorce, they still have to pay those shared financial obligations. Both spouses might theoretically have debts that require years of payments after the end of a marriage.
Typically, spouses have to address their credit card balances and other debts as part of the property division process during a divorce. Particularly in cases where one spouse has a stronger track record of financial responsibility than the other or when emotions are quite intense, people may need to be proactive about protecting themselves from future financial complications.
Divorce decrees don’t eliminate legal obligations
As a general rule, debts assumed during a marriage are the responsibility of both spouses. That remains true even when the spouses divorce. Whether spouses reach an agreement regarding the distribution of their shared debts or a judge creates a property division decree allocating specific financial responsibilities to each spouse, both spouses are still legally responsible for marital debts.
Even when there is a court order requiring one spouse to pay certain debts, there is no guarantee that they will fulfill that obligation. They might default by failing to make payments. They might file for bankruptcy, eliminating their risk of collection activity while putting the other spouse at risk. Despite the family court order declaring one spouse responsible for the debt, creditors can potentially pursue collection activity or legal action against the other spouse.
How do people protect themselves?
There are two ways for divorcing spouses to limit the likelihood of a default affecting their credit or finances years after a divorce. The first option is to assume responsibility for most or all of the marital debts in exchange for more marital property or other economic concessions during the divorce.
The second option is to use marital assets to resolve all outstanding marital debts. Doing so can protect spouses from scenarios in which they face collection efforts or creditor lawsuits years after the courts declared the other spouse responsible for certain credit card debts or other financial obligations.
Addressing potential sources of future financial stress during property division negotiations can help people move forward with a clean slate after divorce. Credit card balances and other debts require careful consideration as people seek to divide their resources and move on with their lives.
