dividing debt in divorce in california

Credit Card Debt and Divorce

Goldberg Jones Divorce, The Divorce Process Leave a Comment

People who get divorced have generally spent quite a bit of time thinking about it. Unfortunately, they usually aren’t thinking about the more granular details.

How Does Divorce Affect Your Debt?

The most important thing to remember about credit card debt and divorce is that credit card companies ARE NOT bound by divorce agreements.

If you file for divorce and you have any shared credit card debt with your spouse, in the state of California, you are equally liable for paying it off.

Since CA is a “community property” state. That means that if you haven’t planned in advance, your soon to be ex could go on a “spite-spending-spree” with your joint credit cards.

That may hurt them as well but it will definitely hurt you and as we mentioned, any decisions relating to divorce can be emotional and therefore, irrational. Financial experts highly recommend, if possible, that you pay off and close joint credit accounts before filing for divorce.

You may be responsible for only half the debt if it was incurred for the sake of the marriage but so far as the credit card company is concerned, if your spouse stops paying their court ordered share, it’s back on you.

Can You Prevent Your Spouse From Accruing More Debt?

If you are having to triage your debt priorities, paying off and shutting down any accounts that can still be drawn from is priority number one.

Keep in mind that if you cancel those joint accounts and put them in your name, you are blocking your spouse from using them, but also taking responsibility for any future spending.

One common use for a Restraining Order is to prevent your spouse from depleting assets while going through a divorce.

The financial agreement is between you and the lender. The court is only a middleman. More specifically, they’re a middleman for whom you have to pay money every time you interact with them.

They can compel your ex to hold up their end of the agreement but that might take time and in the interim, it’s your credit being wrecked and your responsibility to pay the bill.

In addition, if you file for a legal separation, it is very important to file documentation with the court regarding your joint accounts and debt to protect yourself. This can help prevent any bad decisions on the part of your spouse from impacting you.

If you have equity in a jointly owned home, it’s not a bad idea to take a loan against that equity to pay off other accounts, particularly if you are likely to sell the home and split the assets. It’s best to walk away as cleanly as possible for your fresh start. Depending upon how bad your situation is, sometimes bankruptcy is a consideration.

Related Reading:  Should You File For Bankruptcy or Divorce First?
Related Reading: Divorce Or Legal Separation?
Related Reading: Does It Matter Who Files First?

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