The law holds alimony payments superior to other debts and an ex-spouse would find themselves in legal trouble if they divert the payments without getting legal authorization.
How does divorce affect your credit card debt? There are many potential ramifications to divorce, and one area that typically needs to be untangled is a divorced couple’s finances.
Reader Trish in Texas writes that after her 2017 divorce she became responsible for a Target Mastercard credit card, which is a joint account she and her ex-husband had opened together (a divorce decree could specify which spouse is responsible for joint credit card accounts). Although she paid off the balance on the card, she has racked up new debt on it due to medical bills.
With this balance showing up on her ex’s credit report, since it is a joint account, he has threatened to cancel the card. He would also like to divert her $2,000 alimony payment to offset this debt. Trish hasn’t been able to work because of the medical issues, and says the alimony is her only source of income.
Communicate with the card issuer
As joint account holders, both you and your ex-husband are responsible for paying the balance on this card. So the balance on this card, and how you maintain your payments on it, will affect both your credit report and your ex-husband’s.
Although you are responsible for this card, both you and your ex-husband have a contract with the lender. No wonder your ex-husband is concerned about this debt.
Your best bet would be to talk to the card issuer to work out this situation, according to the credit bureau Experian. Issuers have their own approaches to these sorts of situations.
Your ex-husband could potentially cancel your credit card, depending on the issuer’s policies. Some companies may require the card to have a zero balance before it is closed, which means your ex would have to pay off the debt before canceling the card. The card issuer could also tell you if you have any other options.
Others may require him to apply for another card on his own. He could remove himself as a joint account holder, with the credit card issuer altering its original contract with the two of you so that he is no longer responsible for the card.
For this to happen, the issuer would have to be assured that you would be able to make the card payments on your own. When the card company issued the card prior to your divorce, they approved the card based on qualifying both of you together.
See related: Credit score effect of removing yourself from credit card you share with your ex
Alimony payments cannot be diverted
Your husband cannot legally divert your alimony payment to pay off this credit card debt.
“The ex-husband’s trying to pay off an unsecured creditor — even if it is a joint unsecured creditor — instead of paying alimony is a huge mistake,” Austin, Texas, attorney Cristi Trusler said via email. “If a person is found to be in contempt of court for failing to pay an alimony or child support payment, attorneys’ fees are almost always ordered by the court (mandatory in Texas) unless the court finds ‘good cause’ for why they should not be assessed against the obligor.”
She added, “There is sometimes jail time as a consequence for contempt findings too.”
Although people sometimes assume that they can come up with their own remedies in these sorts of situations relating to child support or alimony payments, they are not legally allowed to do so. An alimony payment is a “domestic support obligation” and legally takes precedence over other debts. These sorts of payments cannot even be dismissed in bankruptcy.
In fact, according to a 1933 court ruling in California, “Alimony is protected because its purpose is to provide the wife with support, and public policy demands that there be no impairment of the fund which by law constitutes her maintenance.”
Trusler notes, “The alimony payments can only be altered by a court or if one of the conditions for the alimony payments to cease occurs. The only mandatory termination event is death of the recipient.”
The alimony payments could also end in case you have remarried or are “cohabiting.”
See related: Bankruptcy doesn’t absolve spousal support payments
Keep making payments while you work out a resolution
Trish, it looks like your alimony payment remains safe, but you will have to work out the credit card issue with your ex and the card issuer. In the meantime, do your best to stay current with the payments on this card so that there is no negative impact to either of your credit reports.