One of the most complicated parts of the legal divorce process is dividing marital assets and debts. New Jersey law provides that marital property must be divided equitably. Equitable distribution means that debts and assets must be divided fairly, but not necessarily equally. Of course, deciding what is fair is a pretty subjective matter.

Credit card debt is one liability that can be quite difficult to divide fairly. This is, in part, because it may be the case that a credit card is only in one spouse’s name but both spouses have charged items to the account. On the contrary, a card might be in both spouses’ names, but only one spouse uses the account. Further complicating matters are situations where one spouse was a co-signer, or one spouse uses a credit card for business purposes.

In general, the credit card agreements that a person and his or her spouse signed will be the starting point for determining liability.

• If only one person signed the agreement, this is the person who will be liable for the debt. However, if a great amount of the charges on this account benefitted the non-card holder spouse, the cardholder would want to talk to his or her attorney about considering this as a marital liability, included in the pot of debts to be divided.
• If one spouse co-signed the other’s account, it may be wise to close that account–assuming the balance is zero–to avoid issues.
• If both spouses are named on an account, and both have used the account similarly, this is likely a marital liability.

Parties to a divorce, as well as their attorneys, should assess their debts and determine which debts are truly mutual and which debts are individual debts. Once a division is negotiated, it is wise to remove your name from any accounts you will no longer take responsibility for to ensure it does not affect your credit and that you will not be held liable for any default.

It is best to seek legal guidance regarding the division of credit card debt because this is such a complex issue and there are a number of different possible scenarios and solutions.

Source: Fox Business, “Will my Husband’s Business Card Debt Hurt my Credit After Divorce?” Elaine Pofeldt, April 25, 2013