When Your Ex-Spouse Fails To Pay Credit Card Debt

divorce-credit-card-debtDivorce can create some complicated financial problems. It is easy to understand why.

Where two people were ‘sharing’ living expense before, they are now living individually and may not be sure who is responsible for what.

Add in the complication that many times, when you separate, joint debt is involved. Both spouses may use one combined line of credit, have a joint credit card or one spouse may have a spousal card. Who continues to use this credit can cause financial problems for the ex-spouse.

From your credit card provider’s point of view joint debt means that each of you is responsible for the entire debt. If you, or your spouse, continue to charge purchases to your pre-divorce credit accounts, the other spouse will become liable for any unpaid balances.

Debts and Separation Agreements

You and your ex-spouse may have signed a separation agreement and your ex-spouse agreed to pay the joint credit card. This agreement is between you and your ex-spouse and didn’t involve the bank. If your ex-spouse failed to pay the debt, you will be responsible for the all of the payments on the joint credit card; not just want you consider your share. Also, any missed payments or late payments will continue to affect your credit score no matter who was supposed to make them.

If you think this will be a concern, talk to you bank before you sign the separation agreement about getting two separate loans in each of your names to pay off the old joint debt. Your bank probably won’t just remove your name from the account if there is an existing balance. They will want to be sure they can collect, despite your divorce. Once the old accounts have been paid off and balances transferred, close the pre-divorce credit accounts if that’s possible. At a minimum, get in writing from the bank any adjustment to the agreement as to who is responsible for payments.

If pre-divorce debts become a problem, talk to a bankruptcy trustee about you options. Even in a divorce, both spouses can still file a joint bankruptcy or joint consumer proposal if that makes sense.