Credit Card Complications: What To Know About Debt And Divorce
Chances are, you and your spouse have credit card debt. When a couple divorces, there must be decisions made about all types of debt. Credit card debt is unique because it falls into the category of unsecured debts. That means that the debt stands alone and is not attached to a piece of marital property. A mortgage and an automobile loan are secured debts since they are attached to a home and a vehicle. You might think that unsecured debts are easier to deal with during a divorce, but credit card debts often bring even more complications than secured debts. Read on to learn more.
Know How Your State Handles Property And Debt Divisions
Most people have heard about community property. Often, it's the big-ticket Hollywood divorces that catch all the attention, and for good reason. California is one of a few states that still use the community property method of dealing with property and debt. Take a look at how the issue of credit card debt is treated in community property states, like California, and in the equitable distribution states.
Community Property States And Divorce
Only 10 states still abide by community property rules, with most opting for equitable distribution. If you reside and divorce in a community property state, your marital estate is considered a community. You and your spouse and all you owe (and own) are part of the community. This form of divorce may be simpler than equitable distribution, but it may not be as just. With the exception of any credit card debt brought into the marriage, everything you have two charged is simply split down the middle, 50/50. This can be incredibly unfair to the spouse who did not use the cards, did not have any debt, and did not incur any debts.
Equitable Distribution States And Divorce
In contrast to community property states, equitable distribution attempts to be more equitable. The credit card debt is divided up depending on the name on the account and who used the card. If the card is jointly owned, the judge will often split the debt down the middle.
Don't Leave It To The Judge
No matter what type of state you live in, it's always better to come to an agreement between you two and keep it out of the courts. Just knowing how your state's divorce law handles debts and property can be your guiding influence. It should be noted that if you both agree, your agreement does not need to take either the community property or equitable distribution model into consideration when you form your own agreement. Speak to your divorce attorney to find out more about this issue.