Here are some FAQs I’m often asked around splitting credit card debt during divorce:
How can we separate shared debt during divorce?
There are many factors that go into determining how the assets and liabilities are split, but usually the courts will divide assets and liabilities 50/50.
What happens to individual debt during divorce?
In a common property state, individual debt accumulated during a marriage can be seen as joint liability similar to assets. However, multiple factors go into determining how assets and liabilities are split that will be determined during the legal process of divorce.
What happens with debt you already had when you got married?
Usually debt that you had when you entered the marriage would be seen as yours. However, you should consider what you brought to the marriage. Ask yourself, who did the debt benefit and is it equitable?
How does interest rate factor into negotiating credit card debt?
It’s important to review income, expenses, assets, and liabilities when it comes to debt. Evaluating the interest rate on your credit card and how long it will take to you pay it off is an important consideration.
Are there any other debts you could negotiate to pay instead of credit card debt?
You want to consider the tax implications and advantages or disadvantages of keeping certain debts such as, mortgages vs. credit card debt. Though mortgages may provide tax advantages and give you deductions, they may be offset by the cost of maintaining a home, the mortgage payments, or property tax.
How do you handle disputes that come up during this process?
Prepare for disputes by knowing 1) all relevant information, 2) your negotiables and non-negotiables and 3) your current and future financial needs. Doing so will help put you in the strongest position for negotiation.