Despite how powerful the judge may seem in your divorce case, they cannot do anything to affect a contract you agreed to with a credit card company. If you decided to pay a specific interest rate on credit that you utilized, that is the agreement you will be bound to.
This is regardless of what your divorce decree says. You and your spouse could theoretically agree to split any amount of credit card debt in your divorce. However, if the credit cards are all in your name, your spouse will not be legally responsible for them. If they fail to reimburse you their half, then you can take them back to the judge to seek to enforce your divorce decree, of course.
The point is still that there is no fail-safe method of handling credit card debt in your divorce case. Your creditors will still be looking for payment by hook or by crook. What then are some possible outcomes from your divorce that can consider the debt you owe? The purpose of today’s blog post from the Law Office of Bryan Fagan, PLLC, is to review some of the methods of dealing with credit card debt in your divorce.
Community Income to Pay Debt
You were utilizing community income to pay debt solely in your or your spouse’s name. In the opening to this blog post, the point I made was that if you took out debt solely in your name (or likewise if your spouse did), you could expect to pay that debt out of your divorce as your responsibility. Commonly I will tell potential clients and clients alike that you can expect to take on your debts, and your spouse can expect to take on their debts after the divorce.
In some instances, however, your community income can be utilized to help pay down debt that is solely in your or your spouse’s name. This may be due to differing levels of relative wealth, i.e., if you or your spouse have a higher income earning potential or prospects for building wealth, you may be asked to take on some debt in your spouse’s name out of fairness or equity.
I realize this may not seem fair to some of you, but Texas is a community property state for better or worse. If this were property instead of debt, then you all may not have the same opinion as to the spouse with more to share with the spouse who would have less. All the more reason to clean up your debts as quickly as possible to not have to deal with them during a divorce.
Separate Income to Pay Community Debt
You are utilizing the separate income of one spouse to pay the community’s debts. This takes the prior scenario to the extreme. Instead of money that is theoretically yours and your spouse’s to pay down debt solely in one of your names, this situation describes utilizing the money considered the separate property of you or your spouse to pay the community’s debts.
If you are the higher income earner compared to your spouse and some debts were utilized to benefit both of you equally, then it is possible that you would either agree to or be ordered to pay the debt out of your separate property.
The problem you may encounter here is that the credit card companies don’t care who is ordered to pay what in the divorce decree. If an account holder does not pay the debt on time, the credit card company will go after the account holder for payment.
This is where enforcement of the terms of the divorce decree would have to be filed to have the matter addressed with a judge. Unfortunately, money and time are spent with a great deal of frequency if this arrangement is entered into.
Take on debt, take on the property.
To cancel out your taking on the entirety of debt, you would likely be awarded an offsetting amount of property. This is a clean and easy method to allocate credit card debts in your divorce. For example, if you are a credit card holder and have $15,000 worth of debt on a credit account, you can agree to take on that debt as your sole responsibility in exchange for property worth $15,000.
This works best if you and your spouse agree that the debt was incurred in a joint venture of some sort, such as renovating your home or purchasing an item utilized equally between the two of you.
If you and your spouse choose to utilize this method, you should be prepared to submit an accurate inventory and assessment to your attorneys for exchange before any mediation session.
The reason being is that both sides will want to make sure that you have agreed to take on a piece of property that is actually of equal value to the debt. Getting the framework of an agreement in place is not the problem. Finding a piece or piece of property to offset the debt can be tricky and often takes some negotiation and creativity.
Questions about credit card debt and divorce? Contact the Law Office of Bryan Fagan, PLLC, today.
The bottom line is that debt often causes people to make hasty decisions that can impact their future ability to save and build wealth. If you have obligations and have not yet entered into the divorce process, I would encourage you to pay down those debts as much as possible by living on a budget and throwing as much money as you can at those debts. It will provide immediate peace of mind.
However, if you are going through a divorce and have credit card debt or debt of any kind, please contact the Law Office of Bryan Fagan, PLLC. One of our licensed family law attorneys cancan speaks with you six days a week to answer your questions in a free-of-charge consultation.
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Other Articles you may be interested in regarding
- How are Credit Cards Handled in a Texas Divorce?
- How credit cards and debts are handled in a Texas Divorce
- Debts, Credit Cards, and Divorce in Texas
- What Happens to Marital Debt During a Texas Divorce?
- Know How Property and Debts are Divided When Preparing for Your Texas Divorce
- What Happens to Marital Debt During a Texas Divorce?
- Dividing Property in a Texas Divorce - The Just and Right Division
- Why is Separate Property Important and How to Keep it Separate in a Texas Divorce?
- What Wikipedia Can’t Tell you About Texas Divorce and Marital Property Division
- Texas Divorce Property Division Enforcement
- Separate Property in a Texas Divorce?
- Does it Matter Whose Name is on Title or Deed of Property in a Divorce in Texas?
Law Office of Bryan Fagan, PLLC | Houston, Texas Divorce Lawyers
The Law Office of Bryan Fagan, PLLC, routinely handles matters that affect children and families. If you have questions regarding divorce, it's essential to speak with one of our Houston, TX, Divorce Lawyers right away to protect your rights.
Our divorce lawyers in Houston, TX, are skilled at listening to your goals during this trying process and developing a strategy to meet those goals. Contact the Law Office of Bryan Fagan, PLLC by calling (281) 810-9760 or submit your contact information in our online form. The Law Office of Bryan Fagan, PLLC, handles Divorce cases in Houston, Texas, Cypress, Klein, Humble, Kingwood, Tomball, The Woodlands, the FM 1960 area, or surrounding areas, including Harris County, Montgomery County, Liberty County, Chambers County, Galveston County, Brazoria County, Fort Bend County, and Waller County.
