Insight

What Happens to Credit Card Debt When I Get a Divorce?

In a community property state like California, credit card debt may be shared between partners.

Credit Card Debt After Divorce
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Hossein Berenji

April 3, 2019 04:45 PM

California is a community property state. The things you and your spouse acquire during the marriage belong to you both equally. This includes, among other things, your income, personal home, cars, furniture, and business holdings. You may be surprised to learn that your community property also includes debts. You’re the legal owner of the debts acquired by you and/or your spouse after the wedding.

If you get a divorce, you’re both entitled to half of all property. You’re both also equally liable for the debts that accrued while you were together.

What happens if your spouse racks up thousands of dollars in credit card bills while you were married? Do you share responsibility for paying those debts back after you get a divorce? Generally speaking, the answer is yes. This is true even if you craft a divorce agreement that shifts all of the debt to your spouse. Creditors typically don’t care about divorce decrees. They simply care about getting their hands on the money they’re owed.

Are All Debts Community Property?

No. Only the debts accrued during the marriage are considered community property. Let’s say your spouse had $5,000 in credit card debt before you got married. That $5,000 debt would be considered to be their separate property. Separate property belongs solely to the individual spouse. If you got a divorce, you shouldn’t be burdened with any of that debt.

However, the status of property and debts are not set in stone. It is possible to convert separate property to community property, and vice versa.

Here’s an example. Your spouse had credit card debt of $5,000 before you got married. After the wedding, you were added onto the account as a verified user. It’s now much more difficult to distinguish which of you is responsible for the debt. As a result, a court may decide that your spouse’s personal debt has been converted into community debt that you’re both responsible for repaying.

Crafting a Divorce Agreement to Limit Your Liability For Your Spouse’s Debts

In California, assets and debts are generally owned by both spouses equally. During divorce negotiations, you’re each entitled to one-half of all marital property and liable for one-half of all marital debts. However, it’s up to you to figure out how to divide and allocate community property.

Some spouses divide everything 50/50. This often involves selling assets and splitting the proceeds. Debts are simply divided down the middle.

Other spouses agree to take 100 percent of certain assets and debts in exchange for giving up ownership rights to others. For example, let’s say you want to keep the family home. In order to do so, you may have to agree to assume the entire mortgage and all costs related to the home. You get the home, and your spouse is relieved of marital debt.

You can be creative when negotiating your divorce agreement. Not everything has to be split down the middle. A court will generally approve your agreement if you are both satisfied with the arrangement and it appears to divide assets somewhat equally. You may want to consider giving up ownership rights to some assets in exchange for the relief of marital debt. For example, you may be able to get your spouse to agree to take on full ownership of their credit card debt if you’re willing to part ways with the family car.

Creditors May Not Care About Your Divorce Decree

You may have a divorce agreement in hand that plainly states that your spouse assumed all of the credit card debt acquired during your marriage. This should be enough to protect you when creditors come calling, right?

Not necessarily. Creditors don’t care about your divorce or a court order. They care about the money they’re contractually owed. They’ll go after anyone who is even remotely connected to the debt. In fact, they may not even honor your request to remove your name from an account after a divorce. Their sights are set on repayment.

There are ways to protect yourself from your spouse’s creditors:

  • Maintain separate credit accounts while married
  • Maintain separate bank accounts
  • Don’t add your spouse as a verified user on your accounts, and
  • Close joint accounts before you get a divorce.

Most of all, try to work together and communicate about money issues. Figuring out a game plan together can help to protect you both as you navigate your divorce.

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Hossein Berenji is an attorney and founder of Berenji & Associates, a Los Angeles family law firm. Mr. Berenji is a lifelong Los Angeles resident and attended prestigious UCLA and Loyola School of Law. He has over 16 years’ experience helping family law litigants.

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