Despite how powerful the judge may seem in your divorce case he or she cannot do anything to affect a contract that you had agreed to with a credit card company. If you agreed to pay a certain interest rate on credit that you utilized then that is the agreement that you are going to 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 then your spouse is not going to be legally responsible for them. If he or she fails to reimburse you their half then you can take him or her 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. By hook or by crook your creditors will still be looking for payment. What then are some possible outcomes from your divorce that can take into consideration the debt that 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
Utilizing community income to pay debt solely in your or your spouse’s name. The point I made in the opening to this blog post was that if you took out debt solely in your name (or likewise if your spouse did) then you can expect to have to pay that debt out of your divorce as your responsibility. Commonly I will tell potential clients and clients alike of our firm that you can expect to take on your own debts and your spouse can expect to take on their own 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 names. 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 for the spouse with more may have to share with the spouse who would have less. All the more reason to clean up your debts as quickly as possible so as to not have to deal with them during a divorce.
Separate Income to Pay Community Debt
Utilizing 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 money that is 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 there are debts that 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 own separate property.
The problem you may encounter here is that, again, 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 then the credit card company will go after the account holder for payment.
This is where an enforcement of the terms of the divorce decree would have to be filed in order to have the matter addressed with a judge. Money and time are spent with a great deal of frequency if this arrangement is entered into, unfortunately.
Take on debt, take on property
To cancel out your taking on the entirety of a 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 account 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 then you should be prepared to have an accurate inventory and assessment submitted to your attorneys for exchange prior to 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. Actually finding a piece or pieces of property to offset the debt can be tricky and takes some negotiation and creativity often times.
Questions about credit card debt and divorce? Contact the Law Office of Bryan Fagan, PLLC today
The bottom line is that debt often times causes people to make hasty decisions that can impact their future ability to save and build wealth. If you have debts 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 can speak 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 important 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 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.