For many Georgia estranged couples, the question of how to divide credit card debt in a divorce can be just as critical as how marital assets will be split. Many wealthy couples have significant debts, and it can be important to account for this as part of the property division process. One of the most critical items to consider is jointly held credit card debt. Joint cards belong to both spouses as co-owners, so both are liable for the full amount owed. Therefore, many financial experts advise that joint debt should be eliminated as part of the divorce agreement.
Spouses could pay off the joint debt with other assets as part of the process or transfer the balances into the name of each individual. This process can help to protect each party from being held liable for a former spouse’s portion of the debt and prevent the accrual of future joint debt. By cancelling joint cards, people can ensure that the balance does not continue to rise.
The divorce decree and financial agreement can include the distribution of debt as part of the resolution of property division issues. However, creditors are not bound by the divorce decree. If debt remains in both parties’ names and one former spouse declares bankruptcy, creditors could still pursue the other party. While that person could go back to court to uphold the divorce decree, this can be a time-consuming and costly process.
Because financial issues are so critical to emerging successfully from a divorce, it is important to address them at the time the split is finalized. A family law attorney can help a divorcing client protect key assets and negotiate a fair agreement on matters including property division and spousal support.