Top 5 Things to Know About Divorce and Credit Cards

Virginia is an equitable distribution jurisdiction. This means that all marital property is subject to equitable division, which may not always mean equal division. If you and your spouse cannot agree upon a division of marital debts and assets, a court will make this division before issuing a final divorce decree. If you have outstanding credit card debts, what you don’t know now may hurt your credit rating in the future.

Here are the top five things to understand about credit cards and divorce.

1. Not all joint credit cards are created equally. If your credit card is not a joint credit card, you may be liable for your own debts, regardless of the nature of your debt. If your credit card was not a joint account but a separate or individual account allowing authorized users to charge your account, you are liable for your debts.

2. If you have a joint account, you and your spouse remain jointly liable for repaying your outstanding balance. This means that the credit card company can sue each of you or both of you, individually or jointly, for repayment. Just because your divorce decree or settlement agreement requires mutual repayment does not mean the credit card company must honor it. Your credit card company was not a party to your divorce!

3. If your former spouse was an authorized user, you’re the one who is liable for repaying your debt.

4. According to federal law, your credit card company cannot close your credit card account just because you are going through a divorce. However, the credit card company must close the account once either spouse demands closure. In other words, marital status alone does not justify closure but an affirmative request does.

5. Closing joint accounts is often the best option. This way, post-separation debts and debts incurred by one spouse anticipating divorce will not blindside you. You may have to apply for new credit cards individually, but this is not a bad idea to begin establishing your separate credit history.

For a more in-depth discussion of divorce in Virginia, you may want to read the Virginia State Bar’s helpful brochures. You can find one here. Contact me to further discuss your situation.

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