In a divorce, ouples fight over the things they want: the house, the kids, the new car.  But, they are rarely heard fighting over who gets to pay off the credit card bill.  Understanding how divorce can affect personal debt is an important part of the divorce process.

Sometimes, couples can handle the situation amicably, taking the approach that the debt was incurred together so it should be divided evenly in half.  In other instances, one spouse will head on a vindictive shopping spree with the other’s credit card, racking up expenses on over-priced merchandise.

Regardless of the situation, there is a common misperception that agreements included in a court order control a creditor’s ability to seek payment for joint debts. Unfortunately, creditors do not have to honor these accords and may pursue whoever is named on the loan or credit agreement. For example, if you have a joint credit card with your spouse or partner, and he or she agrees to pay it off in as a way to balance your property settlement, the credit card company can still hold you liable. From their prospective, they are unaffected by the court’s order, and it does not change the original contract signed with them.

With that in mind, it is important to know the difference between joint credit accounts, co-signers and authorized users when dividing debt during a divorce.

Joint credit: This means that you are a joint owner of the account. The money or credit is yours to use, but you are responsible for paying the bill. However, joint owners may be held liable for the entire outstanding balance, not just half of it.

Co-signer: The credit is in your spouse or partner’s name, but you cannot use it. However, you pledged to pay the bill in the event the account holder could not do so. If they default on their payments, their mistakes may be reflected on your credit report.

Authorized users: The credit account belongs to your spouse or partner. While you may use the account, you have little (if any) responsibility for making payments on the account. If they default, the lender may still pursue you for payment, even if they may not do so legally. [source]

The best way to protect your finances is to speak with experienced legal council that can take a look at your entire situation and best advise you on how to proceed.  The more assets, cash, and debt, involved in a family law matter the more complex it can become.  Don’t leave your financial future to chance.  Speak with an attorney first.  Managing Attorney Jeffrey Feulner reviews every family law case carefully.  Contact the Men’s Divorce Law Firm today to schedule an appointment to have your case reviewed by an attorney.