When most couples decide to divorce the first thing that both parties generally think about is their children or their assets. In terms of kids, the best outcome is for the parents to negotiate a child custody agreement that will be good for the kids. What I’ve seen and what seems to be pretty standard is that mom gets primary custody, while dad gets the kids one night a week and every other weekend. One of the least considered items is who gets to “keep” the credit card debt they’ve accumulated during the marriage. Let us talk about splitting debt in a divorce.
Splitting the assets
Even in those cases where the parents are able to reach a friendly agreement about child custody, there is another issue that can have both spouses foaming at the mouth. It’s how the couple divides its property.
How this works will depend mostly on whether you live in a community property state or an equitable division state. Without going into a lot of legal mumbo-jumbo, suffice it to say that if you live in a community property state, you will be expected to divide everything you acquired since you got married 50/50 (with two exceptions). However, in equitable division state states, you are supposed to reach a fair and equitable division of your property, keeping in mind that equitable doesn’t necessarily mean equal.
The 800-lb. gorilla in the corner
Once couples get past child custody or splitting their assets, they may notice an 800-lb. gorilla sitting over in the corner called debt. And splitting credit card debt in a divorce can cause more trouble and anger than just about any other issue because nobody, and I mean nobody, wants to get stuck with a big pile of debt.
Four alternatives
There are four ways you can tame that 800-lb. gorilla.
First, you could agree to take responsibility for all the debt.
Second, you might agree to take responsibility for all the debt with the stipulation that you will get more of the assets in return.
Third, you could let your spouse take full responsibility for all your debt but give him or her more of the assets as compensation.
And finally, you can agree to take equal responsibility for all your debt.
As good as it gets
If you and your about-to-be-ex can sit down and calmly negotiate one of these alternatives, that’s as good as it gets.
Unfortunately, this isn’t always the case.
If you and your partner can’t reach an agreement about your credit card debt there’s something you might want to do right away. It’s to contact your credit card providers (their phone numbers are on the back of their cards) and cancel your accounts. Maybe your spouse isn’t nasty or vengeful but if he or she is really angry, you could wake up next month and find that a new $3,000 or $5,000 has been charged to your cards.
The worst case
The worst-case scenario is when your ex is supposed to pay all or most of the credit card debt but either can’t or won’t do it. Credit card companies aren’t bound by divorce settlements. They can come after you to pay the debt. And there’s not much you can do about this except either declare bankruptcy or hire a debt relief firm to help. Neither of these alternatives will probably look very attractive, which is why it’s always best if you can negotiate a debt settlement with your spouse that will leave the both of you feeling that you got a fair deal.