Divorce, credit cards, and debt, Oh my!

The old folk wisdom is that there is nothing inevitable except death and taxes. In the contemporary U.S., however, you would probably have to add debt to that list. Most people have credit cards and many run up substantial debts on them. So the issue arises, in the event of a divorce, is a person liable for their ex-spouse’s credit card debt?

In some instances, one spouse may have run up the balances on a credit card, with interest and even penalties rapidly accruing. Sometimes, they have hidden the arriving bills from their spouse, who only discover the existence of the large debt when a divorce is in process.

In a community property state, which Louisiana is, creditors can assert a claim against either spouse for what is considered to be community debt. If the debt was incurred while the marriage was still in place, the spouse, or ex-spouse, will be presumed to be liable for the debt. They have the burden of proving otherwise.

A divorce decree can allocate various liabilities and assets between the spouses. It can be argued that if one spouse ran up the debt while not telling the other about it, the other spouse is unlikely to have benefited from it. This may be the case, for example, when a husband or wife spends money on an extra-marital affair, paying for motel rooms, dinners out, and so on.

A divorce attorney can argue to the court that such facts should be taken into account in deciding the division of debts and assets between the divorcing spouses. They can also attempt to see to it that credit cards are paid off as part of the divorce settlement. Without court action, the divorce by itself will not end liability for the debt on an ex-spouse’s account.

Accordingly, it is important to retain an experienced attorney who will see to it that these issues are resolved before the divorce is finalized.

Source: Fox Business, “Is Wife Liable for Ex’s Card Debt?” Sally Herigstad, May. 07, 2013