When getting divorced, asset division is a major consideration. Debt division is equally crucial, as many spouses share credit card and loan debt.
According to Experian, there are many factors used when splitting debt after couples decide to dissolve their marriages. Here are a few of those factors, so you remain fully informed during the process.
Types of credit cards and accounts
State laws dictate the handling of debt. Massachusetts is a common law state, which means that certain conditions must apply when it comes to debt liability. First, you are responsible for all debt in your name. Second, you are responsible for debt that is jointly owned by you and your spouse. For example, if you have a credit card in both your names, you are responsible for this debt, as is your spouse.
Finally, you are also responsible for any debt you co-signed on. That means the account or card is not jointly owned, but your signature was necessary for transaction approval. This is often the case when a person has a poor credit score and the lender wants assurance of repayment.
Exceptions to these rules
Courts approach every divorce on a case-by-case basis. That means it is possible to have accountability for debt that does not fall into one of the above categories.
For example, imagine there is a credit card in your name, but your spouse uses it for specific purchases. This might include payments for repairs to a vehicle in their name, or payments for equipment or gear suited to your ex’s profession. In these situations, the judge might assign debt to your former spouse, even though the card is yours.
The best course of action is to address joint debt before finalizing your divorce. If possible, pay off remaining money owed and settle accounts to prevent future issues. Remember, if your ex-spouse is on an account or credit card, they can have a negative impact on your finances.
