The Credit Cards Are in My Name, but We Each Used It During the Marriage. Who Gets the Debt?

In a contentious divorce, the issue of how debt is allocated can be a flashpoint between the divorcing parties. If the divorcing couple cannot agree, then a court will divide debts according to the law in the state. In Ohio, assets and liabilities, including credit card debt, are equitably distributed. It is important to note, however, that credit card companies are not bound by a settlement agreement between divorcing parties. Therefore, if the couple has joint credit card debt, the creditor has the right to demand payment from both spouses even if one spouse has a agreed to take on the debt.

Equitable Distribution of Debt

The issue becomes more complex if the credit card debt is not jointly owned but is in one spouse’s name only, but there is a contention that both spouses used the card during the marriage. Before this debt can be equitably distributed, it must be classified. The debts must be allocated between the spouses based on several factors. Courts will consider who incurred the debt and who benefited from it, which spouse is in a better financial position to pay off the debt, and how debt is related to particular assets. Generally, a court will only divide marital debt, which is debt incurred for the joint benefit of the parties during the marriage. If one spouse has incurred debt through gambling, high living, and reckless investment, a court may decide that this will not be marital debt, even when it was incurred during the marriage. Once the debt has been appropriately classified, a court might divide the debt equally, proportionate to income, assign the debt to the account owner if that is an equitable result, or assign the debt to the party that incurred or caused the debt.

Steps to Take Regarding Debt

If both parties are willing to work together to pay off all the debts in order to achieve a clean separation, then they may do so and use marital assets to pay off the debt. One party may agree to take responsibility for debts in exchange for receiving more assets from the division of marital property. It may also be possible to let the other party take responsibility for the debts in exchange for receiving more assets from the property division.

Columbus Family Law Attorney

It is important that you take steps to ensure that debt is properly allocated if you are in the process of a divorce. Contact the Law Offices of William L. Geary at 706-410-1442 to speak to an attorney who can help you make decisions that are best for your situation.

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