Credit Card Debt: Who Is Responsible for Repayment After a Divorce?

Finances can become complicated whenever a couple decides to file for divorce. While the division of assets is a critical component in a divorce, splitting up marital debt is just as important.

In Michigan, divorce is handled under the rule of equitable division. This means that any assets, property, and debts acquired during the marriage are subject to equal division.

Under Michigan divorce laws, any debt accrued during a marriage, whether individually or jointly, is treated the same. If you or your spouse have credit card debt, you should be prepared for the court to decide how this will be split after your divorce.

Debt Division in a Michigan Divorce

When Michigan couples file for divorce, they often believe equitable division means courts will split their finances down the middle.

While, in theory, the law is designed to ensure each couple walks away with half of all assets, courts may provide relief to one spouse whenever certain factors are true, including:

• One spouse has significantly more financial means
• One spouse is at fault for the divorce
• One spouse will be awarded more property with pending payments
• One spouse amassed considerable debt over the other

In many cases, whenever one spouse incurred substantial credit card debt for themselves or took out a line of credit without the other's consent, the courts can sway in favor of the other party to ensure they aren't held liable for the entire sum.

When it comes to joint credits under both spouses' names, any debt will remain equal responsibility after a divorce.

Dealing with Debt Before Divorce

If you and your spouse are getting ready to file for divorce, it may be wise to resolve any pending financial situations before moving forward.

Proactive financial planning before a divorce can help you avoid financial and legal speed bumps. Going to court prepared will save you and your spouse time and money.

Some considerations include the following:

• Review your and your spouse's credit report
• Refinance car loans or mortgages
• Sell any property you won't be keeping after the divorce
• Split up any accounts as needed
• Pay off or transfer pending credit card debts immediately 

Sadly, many Michigan couples may be in the middle of a financial crisis. Whenever debt coincides with a divorce, the process can become extra challenging.

If you and your spouse have considerable credit card debt that neither of you can pay off, it may be wise to consult with an attorney about filing for bankruptcy. For couples soon to be divorced, Chapter 7 bankruptcy is often the easiest solution for starting a new phase in their life.

Chapter 7 allows you and your spouse to file for bankruptcy jointly and can help discharge secured and unsecured debt, including that from credit cards. Additionally, moving forward with a debt-free divorce can take a significant burden off your shoulders.

Thinking About Divorce in Oakland County?

The attorneys at Gucciardo Family Law are dedicated to representing divorce clients throughout Oakland County. Contact us today for a free consultation if you're considering a divorce.