How credit cards and debts are handled in a Texas Divorce
When people are contemplating a
divorce their first concern is usually their children (if they have any) and thenproperty. The family home, motor vehicles, vacation houses, etc. are at the forefront
of most people’s minds at the time they begin to seriously contemplate divorce.
Maybe you’re in a similar position where you are moving towards a
divorce and have already thought about these subjects. I would ask this
question though: how much thought have you given to your and your spouse’s
debts and other liabilities that have arisen during the course of your marriage?
Just as property is divided in a
divorce, so are debts. How debts are divided and who bears the responsibility
for each debt is a tremendously important part of any divorce. With experience
handling divorces for clients across southeast Texas, the attorneys with the
Law Office of Bryan Fagan would like to share some information with you about credit cards and debts
in general in the context of a divorce.
How to think about debt and prepare for it in your divorce
From my experience,
debts associated with credit cards are among the most widely debated subjects
during a divorce. The items I mentioned at the outset of this blog post:
the family home, cars, home
mortgage, along with retirement accounts make up the most commonly divided items
in a Texas divorce. Debts can be divided up in a divorce to be either
your or your spouse’s responsibility but a divorce cannot absolve
you of future liability on a credit card that bears both your and your
spouse’s names on the account.
Hopefully this has not happened to you, but I have had clients who have
called me and complained that debt collection companies and the credit
card companies themselves will call them at all hours of the day in attempt
to have their credit card balances paid off. While there are laws associated
with the means by which a credit card companies may attempt to collect
their debts, I think the biggest frustration clients have in this area
is that even though they are going through the divorce the credit card
companies don’t seem to know or care. Let’s take a look at
the two types of credit card debt you may encounter in your Texas Divorce.
Unsecured credit card debt basics
When a credit card company or other business/bank who issues you a credit
card gives you a card without taking any collateral back, this is called
an unsecured credit card. The majority of Americans have their credit
cards through a set up like this. Visa, American Express and Mastercard
are examples of credit cards that are unsecured.
When you applied for the card the credit card company did some research
on you and determined that you were credit worthy and a card was issued.
It was their belief that you would pay your bill on time. If you fail
to pay your credit card bill on time to an unsecured lender then you run
the risk of having your interest rate increase or have additional fees
applied to the balance. One thing an unsecured creditor cannot do is attach a
lien on a piece of property that you own in order to recover the value of the
debt. Only if a lawsuit is filed and a judgment against you is rendered
by a court can a lien be attached to piece of your property in order to
pay off the debt.
Fortunately in Texas, our laws are very debtor friendly. Your homestead
and other types of personal property are largely protected against these
sort of actions by creditors. No lien can be attached to your home and
most people lack sufficient value in personal property for a lien to be
attached there either. So while you are protected from these sort of creditors
by virtue of our state laws, the debt will continue to mount with the
credit card company who owns your unsecured debt.
Secured credit card debts in Texas
At the other end of the debt-spectrum are secured credit card debts.
Creditors can issue secured credit cards when a card is attached to your bank account,
for example. Your bank account acts as the collateral involved in the
creditor-debtor relationship. The bank who issues your card may require
you to maintain a certain balance in your checking or savings account
in order to protect them in the event that you fail to pay your credit
card bill. The more history you develop with the bank issued card, and
the more you pay your bills on time, your need to keep this certain amount
of money may decrease.
The other main avenue for gaining a secured credit card is a card that
is issued through a retail store like Best Buy, Target, or Kohl’s.
If you fail to pay a store credit card on time the store will add on extra
fees to each purchase and the debt will increase a great deal. Purchases
that are made with the card can be taken back in the event that the debt
is not timely paid. That’s in addition to a court judgment against
you and possibly your spouse. Not a good set up for you or your soon to
be ex spouse
Consider your debts when filing for divorce in Texas
Your debts are just as relevant to your divorce as your property. As a
result, hiring a qualified and experienced
family law attorney is crucial to your being able to achieve a result that is fair
and equitable. Please consider the attorneys with the
Law Office of Bryan Fagan for your representation needs. Our office has your interests at heart
and are motivated by the needs of our clients. For any questions on the
subject of debts in your divorce please
contact our office today. A free of charge consultation is available with one
of our attorneys six days a week.