Get debt under control before asset division

On behalf of Jeffrey N. Greenblatt of Joseph, Greenwald & Laake, PA posted in Property Division on Thursday, July 24, 2014.

People in Maryland know that credit cards are an essential tool in the business world and a part of most people's daily routine. People use credit cards for everything from their daily cup of coffee to major purchases, so it is not surprising that credit card debt can be a major issue in many marriages. It can also be a major issue in a divorce, and people need to protect themselves and their credit by ensuring that their spouse plays by the rules.

Many married couples share financial accounts. As such, it is not surprising that both spouses often have access to the same credit accounts. Sometimes, spouses co-sign, in which case, both may be responsible for the debt incurred, but a spouse may also be added simply as an authorized user. In the later scenario, the authorized user may not be responsible for the other spouse's debt. Nonetheless, in cases where both spouses are responsible for debt on an account, getting rid of debt can save a lot of hassle down the road.

For example, a spouse may be required to pay-off the debt as part of the asset division settlement, but, if they fail to do so, they could ruin both spouses' credit. Even worse, the spouse responsible for paying-off the debt could file for bankruptcy, leaving the other party solely responsible for paying off the remainder. Some financial experts advise divorcing spouses to take a close look at their assets, including retirement accounts, and consider paying-off any outstanding debt prior to the divorce. Closing out any outstanding debt can close the window on the potential headaches described above.

People should also never put it past an ex that they could get ahold of a joint credit card account and run up a nasty bill out of spite. People need to take a close look at their credit card accounts, and make sure that their spouse's access is cut off before it is too late. For more information on dealing with debt and credit cards in a divorce, an experienced family law attorney can help.

Source: FOX Business, "Debt and Divorce: 5 Steps to Make a Clean Credit Split," Dawn Papandrea, July 14, 2014