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What Happens to Credit Card Debt in a Divorce?

Under Texas family law, debt, like any other property, falls under two categories: separate property or community (marital) property. This means that during a divorce in Texas, you can expect to add debt to your list of things to resolve, along with child custody and visitation, as well as physical assets like your family home and cars.

Who is Liable for Credit Card Debt in a Divorce?

It depends on the state you’re in and whose name the card is under.

In common law states, the answer is fairly simple. The person whose name is on the credit card is liable for the debt.

When you use your credit card, you are legally bound by name to pay back whatever you borrowed. In cases where you state your name and your name alone, the creditor has the right to sue you even if someone else acquired debt in your name, contributed to it, or is authorized to use your credit card.

If you acquired credit card debt in both of your names, both of you become jointly liable for the debt and the creditor may come after your jointly owned assets.

Texas and other states, namely Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Washington, and Wisconsin, follow community properly law. This means that both spouses are liable for any debts incurred while they were married, regardless of who actually spent the money or not.

Upon divorce and the division of community property, the court will often rule that the person who spent the money on assets will also be liable for any indebtedness resulting from these purchases. A close look is given to the person who opened the credit card in question.

How Can My Ex Be Held Liable for Our Credit Card Debt?

In the event that both parties cannot settle outside of court, the divorce is finalized by the judge’s issuance of a divorce decree. This legally binding decree declares the official termination of your marriage alongside specific terms, which can include the rights and responsibilities of both parties.

In Texas, depending on the discretion of the judge overseeing your divorce, you may be legally liable pay for your ex-spouse’s debt.

Credit History In Divorce

Your credit history and credit score do not change when you get married nor when you get divorced. However, bad debtor behavior like late payments and delinquency during and after your divorce may still negatively impact your credit score.

Tips to handle credit during divorce
  1. Split as amicably as possible. Messy divorces are also the most expensive in terms of attorney fees. Refusing to settle runs the risk of a judge taking away your ability to decide on debt responsibilities by yourselves.
  2. Establish your own credit. If you’ve been using a joint credit card this whole time, consider getting your own credit card account as soon as possible.
  3. Close your joint credit card accounts. You will want to open your own credit account before closing your joint account because closing accounts has a negative impact on your credit score.

If you have more questions about credit debt during a divorce in Texas, get in touch with Austin family law attorney Daniella Lyttle of the Lyttle Law Firm. Call our offices today at (512) 215-5225, or use our contact form to schedule a consultation about your case.

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