When you and your spouse decide to divorce, you may need to negotiate issues such as child custody and who gets the house, car and investment accounts. When splitting up your household, however, don't overlook your credit card debts. Although a judge can order either you or your spouse to assume responsibility for repaying your credit card debts, allowing the court to divvy up your accounts may not be the wisest option.
Types
Your credit card accounts can be either individual or joint. An individual account belongs to you alone and only you are legally responsible for making the payments. A joint account belongs to both you and your spouse--making both of you responsible for repaying the debt. In most cases, you'll retain full responsibility for your individual credit card accounts following a divorce. Should you and your spouse share joint accounts, however, a divorce does not exonerate either of you from your responsibility to repay the debt.
Significance
A divorce decree is an agreement between you and your spouse--not you, your spouse, and your credit card company. Regardless of the judge's decision concerning which of you should assume the responsibility for repayment, your credit card company reserves the right to pursue both account holders for the full card balance. Thus, a judge can order your spouse to pay your joint credit card accounts, but if he fails to do so, the credit card company can still sue you for the credit card balance--even if your spouse made additional purchases after the divorce was finalized.
Expert Advice
The Federal Trade Commission recommends that all couples going through a divorce close their credit card accounts. This prevents either spouse from incurring additional debt during or after the divorce proceedings. Your spouse does not need to agree to close joint credit card accounts. Either account holder may close the account without the permission of the other. Although credit card companies are not legally required to convert joint accounts to individual accounts, some will do so on request.
Considerations
If you and your spouse live in a community property state, you are both responsible for all debt incurred during the marriage. Unfortunately, this means that a credit card company can pursue you for charges your ex-spouse made on her individual credit card accounts during the marriage. Any credit card debt you held on individual accounts prior to getting married remains your responsibility alone.
Warning
Leaving your joint credit card accounts open after the divorce could have a disastrous effect on your credit score. Joint accounts appear on both account holders' credit reports. If your ex-spouse makes a late payment to the credit card company--or worse, defaults on the payments--your credit will suffer as a result. According to the Fair Credit Reporting Act, the credit bureaus are allowed to keep negative credit card information within your file for up to seven years. Damaged credit due to a divorce can make it more difficult to get new credit cards in the future when you need them.
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