Alabama's Divorce Law: Who Is Responsible for Credit Card Debt?

By Anna Assad

Alabama is an equitable distribution state when it comes to dividing assets and debts in a divorce. Equitable distribution means the court will divide the debts and property of the marriage in a way that is fair and reasonable when considering the financial and personal circumstances of both spouses. The responsibility for marital credit card debt incurred by both parties is assigned by the court based on Alabama's equitable distribution principles or by a voluntary, mutual agreement reached by both spouses.

Alabama is an equitable distribution state when it comes to dividing assets and debts in a divorce. Equitable distribution means the court will divide the debts and property of the marriage in a way that is fair and reasonable when considering the financial and personal circumstances of both spouses. The responsibility for marital credit card debt incurred by both parties is assigned by the court based on Alabama's equitable distribution principles or by a voluntary, mutual agreement reached by both spouses.

Premarital Credit Card Debt

Premarital credit card debt is the balance on a credit card account that one spouse incurred before marriage. The other spouse is usually not responsible for debt on a premarital card, and that debt is not typically part of formal divorce settlement negotiations or the final agreement. However, if the other spouse made charges on the premarital card during the couple's marriage, she may be responsible for that part of the card's total balance under Alabama's equitable distribution laws.

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Joint Marital Credit Card Debt

Debt on credit card accounts opened during the marriage that both spouses used or that one spouse used to make purchases for the household is the equal responsibility of both parties. Marital credit credit debt is usually divided between the parties through negotiation during the divorce proceedings in Alabama. The final divorce agreement lists which party is responsible for each debt and how much each will be required to pay. But contract law applies to the parties' agreement with the credit card company and takes precedence over the terms of the divorce agreement. Therefore, if a spouse who is obligated for the credit card debt under a divorce agreement doesn't pay off the debt, the card issuer can take collection actions against the other spouse for the entire amount due.

Joint Bankruptcy

If a divorcing couple has a large amount of credit card debt, they can file a joint bankruptcy petition. A Chapter 7 bankruptcy proceeding "wipes out" unsecured debt through a liquidation of assets, while Chapter 13 puts the couple on a repayment plan with their creditors. Whether the couple is eligible for Chapter 7 or Chapter 13 depends on their income. In most cases, the couple's income must fall below the median income for a similar household in Alabama to qualify for Chapter 7. If the couple's income is above the median, they may still qualify for Chapter 7 if their disposable income falls within a certain range.

Hold Harmless Clause

The spouse who is not responsible for a particular credit card debt can have a "hold harmless and indemnify" clause written into the Alabama divorce decree. This clause will not prevent a credit card issuer from trying to collect the debt if the obligated spouse doesn't pay it, but the wording of the clause does give the non-liable spouse legal standing to sue the obligated spouse if she is forced to pay the debt or if she incurs legal expenses stemming from collection proceedings.

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The Responsibility for Medical Debt in a Divorce

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Virginia Divorce & Property Rights Laws

Financial negotiations often affect a divorce, particularly if spouses cannot agree on how to divide their property. In Virginia, if spouses can negotiate their property rights amicably and come to an agreement, the court will honor their wishes and incorporate their agreement into the final divorce decree. However, if spouses cannot agree on how to divide their property, a state court will divide the couple's property according to Virginia law.

Who Pays the Debt in a Divorce in Kentucky?

Married people incur debt as a matter of course. They purchase homes and automobiles. They take out credit cards for emergency expenditures or luxuries. These balances don't go away if they divorce. One spouse – but usually both – must still pay them. Kentucky law divides debts between divorcing spouses in a fair and equitable way, not necessarily 50/50. You have a right to come to your own agreement regarding payment, and a Kentucky judge will probably approve it unless it's grossly unfair to one of you. Otherwise, you'll have to let the court decide.

Can a Wife File Chapter 7 With a Husband If All the Debt Is in the Husband's Name?

In a Chapter 7 bankruptcy, assets are sold to pay the debtor's obligations and eligible debts that are not satisfied by the liquidation are discharged, meaning the debtor is no longer obligated to pay them. If a debtor has a wife, he can file for Chapter 7 individually or together with his spouse. The wife is always allowed to file together with the husband; however, she must consider whether there is any benefit to her if she joins in the filing. If the debt is all in her husband's name, the wife would not get any benefit from filing for bankruptcy with him; she has no debts, so there is nothing for the bankruptcy court to discharge.

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