An old card, left open after divorce, can mean new debt
Debt collectors don't care what your divorce decree says
By Elaine Pofeldt | Published: September 12, 2016
Your Business Credit
I’ve been divorced a few years. My ex and I opened a joint business credit card in 2009. He bought me out of the business in 2012, and assumed the credit card debt. I tried to get removed from the card recently – I was getting notifications of late payments – which prompted the bank to close the account. My ex can't pay the $35,000 balance, and the bank is coming after me. How do I get the bank to go after only him? I do not want my credit adversely affected. I told them about our signed agreement from 2012 which states I'm not responsible. They don't care – Becky
First the bad news: You can’t stop the bank from coming after you. “The divorce court can’t and won’t prohibit the bank from trying to collect on a valid debt,” said Christian Denmon, a divorce lawyer in Tampa, Florida, with Denmon & Denmon, in an email. “The court can't control how a third-party creditor tries to collect on a pre-existing debt.”
But there is something you can do, as he explained when I spoke with him by phone. The divorce court can order your husband to indemnify you and hold you harmless from the credit card claim, if you petition for this.
Given that your ex-husband doesn’t have the cash to pay the $35,000 balance, you will probably need the help of a good attorney to ensure he pays it some other way. “The ex-husband may not have money but he may have assets that are attachable in certain states,” noted Denmon. “If he does have assets but he doesn’t have income, the judge has the ability to do something – order him to pay X amount per month, for example.” Some jurisdictions will allow wage garnishments under such circumstances, noted Jason Reiman, a financial planner in Tuscson, Arizona, in an email.
Unfortunately, if a judge issues an order and your husband fails to comply, you will have to address it through the court system. Depending on the circumstances, it may make sense for you or your ex-husband to speak with an attorney about bankruptcy, Reiman said.
Your letter is a good reminder of how important it is to address any debts that exist on joint credit cards when going through a divorce. Many people don’t get professional financial advice during a divorce and find that this costs them a lot of money later.
“The remedy to this would have been to close all joint credit cards, business or otherwise, at the time of the divorce,” noted Rosemary Frank, a registered investment advisor in Brentwood, Tennessee, in an email. “If there was a balance on the card at that time, it could have been transferred to a new individual card in the business owner’s name.”
Of course, it is too late to go back in time now, so your best bet is to work with your attorney to get your ex-husband to pay.
See related: Dividing credit card debt in divorce
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