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Divorce can be a challenging process, particularly when dealing with the financial aspects. Dividing debt related to credit cards during divorce can complicate that process, especially if your spouse has credit cards and debt you were unaware of.
Credit cards and shared debt in New Jersey
Am I responsible for my spouse’s debt in New Jersey? In general, if the purchases made with the credit card went toward family or marital expenses, both parties would be responsible for the credit card debt, even if only one spouse is named on the account.
Dividing Credit Card Points and Rewards in Divorce
Credit card points and rewards, such as frequent flier miles, are considered a marital asset and should be treated that way at the time of a divorce. Sometimes people run into problems because the company may not permit points to be divided or transferred. However, not unlike the distribution of other assets during a divorce, these marital assets can be distributed in other ways, such as by trading the value for something else, or payment by way of cash distribution.
Joint credit score
Credit scores are not joint. They are individualized. However, joint accounts including ownership of assets such as mortgage payments, automobile loans and joint bank accounts could impact the credit score of both people. This is the reason why it is so important that people understand the impact of divorce and credit cards as well as potential consequences of having a joint credit card with your spouse.
A credit report includes information about your debts; however, accounts have the same impact on your credit score whether you are a joint owner of the account or an individual account holder.
Joint credit card versus authorized user
What is the difference between a joint account and an authorized user? Joint credit card debt is the responsibility of both parties, but an authorized user is generally not responsible for the repayment of the debt.
Can I open a new credit card during divorce?
Yes, you can open a new credit card during divorce. Just be sure that in doing so you understand that you will be solely responsible for the debt that you incur, unless there is some sort of agreement to the contrary in writing. It is always best to consult with your attorney before making any decisions that could have a financial impact moving forward.
Can you close a joint credit card without the other person?
It is customary that both card holders must agree to close the account and that each person would be responsible for repayment of the entire outstanding balance. Most credit card companies require that the account be closed before removing one person‘s name from the account.
How do I separate my credit after divorce?
First, explore whether the credit card company will agree to remove your spouse’s name as an authorized user, or if it is possible to close the joint account to ensure that additional charges will not be permitted. Having a joint credit card with a spouse makes sense during the marriage but can create obstacles when the marriage is over. Take the next steps to inform all existing creditors that you are not responsible for debts charged by your former spouse on any existing joint accounts following the divorce. Any joint accounts that can be closed should be closed as soon as you are able to do so.
Additional steps to take when preparing for divorce
Monitoring your credit is a smart step to take as you prepare for divorce. One of the easiest and most cost-effective methods to monitor your credit report is by maintaining a free membership with all three credit reporting agencies: Equifax, TransUnion and Experian. This will allow you to frequently view your credit score as well as outstanding debt and be sure that all the information that is appearing on your credit report is accurate. There are also resources for you to dispute debt that might be inaccurate or make changes when necessary.
Not only should a person consult with a family law attorney if they are considering divorce, but people considering divorce should also consult with other professionals that can provide guidance along the way. Consulting with a financial advisor could prove helpful when navigating divorce and credit cards. When people have joint credit card debt with a spouse, independent financial advice could be helpful in avoiding additional roadblocks along the way.
Seeking help when dealing with credit cards and divorce
If you are concerned that your husband maxed out your credit card or that your wife ran up credit card debt, it is probably time to consult with legal counsel. Here, at DeTorres and DeGeorge we zealously advocate for our clients. It is important that people understand not only their rights, but also the implications of choices that they made during the marriage as well as choices they will make following their marriage. If you have questions about divorce and credit cards, having a joint credit card with your spouse, or removing your name from a joint credit card after divorce, contact us today for a consultation. We are here to help!
Frequently Asked Questions
Can I cancel a joint credit card during divorce?
You can attempt to do so, but you may not be permitted to cancel a credit card during divorce.
Can I remove myself from a joint credit card?
Most often one owner is not able to remove him or herself from a joint credit card account without the account being closed.
Are authorized users responsible for debt?
Generally, authorized users on a credit card are not legally responsible for paying the debt. It is typically the primary cardholder that is legally responsible for making the payments.
What happens to joint credit cards after divorce?
The debt remains. It is incumbent upon you to take the necessary steps to address the existing debt and to ensure that your former spouse does not incur any further debt that you will be obligated to pay.
Can you keep a joint credit card after divorce?
Yes, but it is best not to do so or at least take the steps necessary to prevent additional charges from being incurred.
Can a joint credit card be split?
Not necessarily, but the debt can be distributed between the parties during a divorce.
Can I remove my ex-wife from my credit card?
It is probably best to cancel a joint credit card altogether rather than continue to maintain a joint credit card with your spouse.
How much does a divorce lower your credit score?
Divorce alone does not lower your credit score but certain aspects of the process could lead to situations that ultimately could impact your score.
Can a credit card company seize a joint bank account?
Yes, if the credit card company sues you, as a result of the lawsuit, it is possible that your bank account could be seized.
