Divorce and credit card debt don't mix

Best advice: Pay off joint debt before divorce is final

The Credit Guy columnist Todd Ossenfort
Todd Ossenfort has been chief operating officer for Pioneer Credit Counseling since 1998. He writes our weekly "The Credit Guy" column, answering reader questions about credit counseling and debt issues.

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Question for the CreditCards.com expert

Dear Credit Guy,
I am going through a divorce at this time. My wife is unemployed and has been for 13 years. She refuses to get a job. She is holding credit cards in her name that we applied for in the past (MISTAKE). She is planning on using the cards, and I want to protect myself. Do I write a letter to the creditors and the credit bureaus and explain the situation? Do I try to close the accounts with the explanation that she refuses to go get a job? How do I protect myself? -- Jacob

Answer for the CreditCards.com expert

Dear Jacob,
Ending a marriage is never a pleasant task and separating finances from a marriage can be even worse. I have heard many horror stories surrounding divorce. The most important thing to keep in mind regarding finances in a divorce is that your creditors are only interested in the signed agreement they have with you. The fact that you are divorcing or divorced does not change that agreement. If you have joint credit card accounts with your spouse, the only way to avoid financial responsibility is to pay off the balance or have the balance transferred to an account in only your spouse's name and then close the original account.

Divorce decrees often include credit card accounts, mortgages, student loans, car payments, etc., that each spouse is responsible for paying. However, the only way to enforce the division of debt in a divorce decree if a former spouse does not pay is to take the former spouse to court. Court action is an expensive process that would be better to avoid if at all possible.

The best thing to do with any joint accounts is to close those accounts and move the balances to separate accounts, as agreed in the divorce decree, before the divorce becomes final. This may not be possible in your situation because your spouse is unemployed. In some cases, if the divorce is not amicable, or one spouse refuses to open another account and transfer the balance from a joint account, I recommend you go ahead and close any joint credit card accounts to prevent either spouse from adding to the balances. Most creditors will not remove your name from a joint account if the account has a balance.

To protect your credit score, request that the creditor send statements to you as well as your spouse for closed joint accounts. If she does not pay, you may decide to make payments on those accounts, even if your spouse is assigned those debts in the divorce. That's right, you may need to grit your teeth and pay her debt: As long as a joint account remains with a balance, your credit score will be negatively affected if payments are not made. You can always keep track of the payments made on an account assigned to your spouse in the divorce and pursue collection in court at a later date  when and if she does become employed.

You are not financially responsible for any credit card accounts that are solely in your spouse's name -- unless, of course, you are assigned to pay them as part of the divorce settlement. Should that be the case, I would consult with your attorney and be sure that all accounts in her name only assigned to you for payment in the decree are closed before the divorce can be finalized as a condition for you paying the balances owed on the accounts.   

Take care of your credit!

See related: Divorce and debt stories and advice, Dividing credit card debt in divorce, Protect your credit score during divorce, Dividing credit card debt in divorce, Tips for rebuilding your credit after divorce

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Updated: 11-23-2017