This is how credit card debt gets split up in a divorce

folder hands with documents in between

The following is being provided for informational purposes only and is not intended as legal advice. 

Divorce is an unpleasant process, even if the outcome is in everyone’s best interests. Part of the unpleasantness comes from splitting a single household into two. Over the course of a marriage, you collect a good many things together – including debt. And since debt happens to be one of the few things you’ll fight to not keep, you may be wondering exactly what happens to your debt when you get divorced.

Negotiation versus trial

Divorce often involves a lengthy period of negotiation, where both sides try to divide assets and responsibilities in a mutually acceptable manner. In the event there are issues that the two parties cannot resolve through negotiation, the matter may go to trial, in which case a judge will provide an order of dissolution determining how everything is divided.

If everything is settled during negotiations, then the fate of your debts will be decided there. You may choose to split everything evenly, or one party may take on a greater share of the debt in exchange for a larger share of the assets (such as the house).

If you end up going to court, the judge will weigh all available factors before deciding what happens with your debts.

The law and your debts

In most states, it’s generally presumed that if a debt is in your name, it’s your responsibility. This becomes a little muddy in the small handful of “community property” states. In these states, debts incurred during a marriage (but not before or after) are generally viewed as being community debts, with both spouses sharing equal liability in the eyes of the law. Exceptions are made, however, and you could argue that a particular debt did not benefit the household, but instead only benefited one spouse.

Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Alaska is not a community property state, but you do have the option to make your property community property if both spouses create and sign an agreement.

Creditors don’t care about divorce decrees

That may sound a little harsh, but the truth is that no matter what decisions are made between you, your former spouse, your divorce attorneys, and the judge, you already have an agreement in place with your creditors and they intend to hold you to that agreement.

This is very important to keep in mind. If your name is on an account (and not merely as an authorized user), the creditor will hold you responsible for the debt. If your former spouse agrees (or is required) to repay a debt and doesn’t, your credit can be damaged and the creditor can begin collection activities against you. And if they file for bankruptcy, the responsibility may shift to you (presuming you have some legal liability for the debt).

Thankfully, while your creditors may not care about what’s stated in your order of dissolution, the court does, and you can potentially sue your former spouse for damages if they fail to repay those debts as agreed upon.

Minimize pain by being proactive

No matter how cordial and civil both parties may be, divorce can be painful. Of all the things you’ll be working through together, credit card debt will probably be a lower priority, but there are definitely ways you can make that part of the process less difficult.

Split up your accounts quickly, cleanly, and thoroughly. If a spouse is an authorized user on your account, have them removed. If you have any joint accounts, decide who will keep the account and contact the applicable creditor to have the second party removed. If you can’t decide who keeps the account, close it and open a new account in your name.

Pay off or transfer debts ahead of the divorce if possible. The act of splitting up debts can be messy and, as noted, even if your order of dissolution says you aren’t responsible for a debt, your creditor may disagree, and you can suffer if your ex-spouse fails to make their payments. You may be able to sue your former spouse for damages in that scenario, but it would much easier for all parties involved if those unsecured debts were simply paid in full ahead of time.

If you don’t have the ability to clear those debts before the divorce, it’s a good idea to instead transfer them to accounts controlled solely by whichever party the court has ordered to repay the debt. This way if your spouse doesn’t make their debt payments, they’ll be the only one to suffer.

If you’ve gone through a divorce and find you’re having a hard time getting your income and expenses back in balance, consider speaking with a certified and experienced debt and budget counselor from MMI. They can help you make sense of your budget and give you tips and ideas on how to make your money stretch.

Tagged in Laws and legal questions, Money and relationships, Navigating change

Jesse Campbell is the Content Manager at MMI. All typos are a stylistic choice, honest.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.