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How credit card debt can cause issues even after a divorce

On Behalf of | Dec 26, 2023 | Property Division

Credit card debt has a way of creating disagreements during Texas divorces. Spouses may argue over which debts are part of the marital estate. For example, one spouse may want to exclude credit card balances related to an extramarital affair when negotiating a community property settlement.

Additionally, spouses may disagree vehemently about the reasonable or fair way to divide those debts. Sometimes, one spouse takes responsibility for a significant amount of the debt because they retain more marital assets or have a higher income. Other times, each spouse accepts responsibility for certain debts and credit card balances.

Yet, those joint financial responsibilities don’t just disappear after a divorce. Sometimes, they can come back to haunt people long after a divorce because the other spouse defaults.

Family court orders don’t have universal authority

All too often, those negotiating a property division settlement or awaiting a judge’s order overestimate the authority of the family courts. They might think that their spouse has sole responsibility for certain credit card debts because of the property division order.

While that may be true in the eyes of a family law judge, neither the civil courts nor the creditors owed money will necessarily pay much attention to a family court order. If both spouses were cosigners for a credit card or other debt, then they are both responsible for the balance due until someone pays it in full.

If the spouse ordered to pay the credit card defaults or declares bankruptcy, creditors may take legal action against the other spouse. Those actions could lead to wage garnishment or a major drop in someone’s credit score despite a family court order declaring that their spouse is the responsible party for that specific debt.

There is never any guarantee that someone ordered to pay specific credit card debts and other marital financial obligations as part of property division proceedings will do so in a timely manner after the divorce. People may benefit from considering that risk when they negotiate with their spouses or present their case to the courts during a litigated divorce. In these ways, identifying the risks inherent in dividing credit card debt, and seeking legal guidance accordingly, may help people better protect themselves during a Texas divorce.