Credit card companies really don’t care about your divorce, even if you and your spouse are joint cardholders. The onus for sorting out your debts falls on you and your spouse – or the court will do it for you if you can’t come to an agreement. In either case, potential creditors are probably your last concern. You don’t have to notify them of the private, personal details of your life unless you choose to.
Existing Joint Accounts
The balances on any credit cards that accumulated during your marriage must be addressed when you divorce. Depending on where you live, the court might assign payment and responsibility for these debts 50-50 or in some other measure. In the nine community property states – Arizona, California, Wisconsin, Washington, Nevada, Texas, Louisiana, Idaho and New Mexico – courts generally make an even division of property and debts. The law in these states assumes that spouses equally owe and own everything acquired during the marriage. The remaining equitable distribution states divide marital debts in a way that seems fair. For example, if you earn $100,000 a year and your spouse earns $25,000, dividing a $60,000 debt 50-50 might not be considered equitable.
Effect of Decree on Creditors
No matter where you live or how your credit card debt is allocated, your divorce decree’s terms don’t matter to your creditors. If you’re charged with paying off one of your spouse’s credit cards as part of equitable distribution, and if you fail to do so, the company can and will pursue your spouse for payment because your decree doesn’t override the fact that she’s the one who signed the contract to borrow the money. If she’s charged with paying off a joint account and doesn’t do it, the creditor can come after you for payment because you also signed on the account. In no case is a creditor bound by the terms of a divorce decree or judgment, because it isn’t a party to the divorce action.
You may want to notify your existing credit card companies of your divorce if only to prevent further charges while your divorce is pending. Although most creditors won’t allow you to close an account on which you owe a balance, you can let them know that you and your spouse are breaking up and ask them to effectively freeze the account so no further charges can be made. Although there isn’t any particular process you should abide by – and the requirements might vary by lender – it’s generally a good idea to do so in writing and keep a copy of the correspondence. If creditors do allow your spouse to make additional charges after you notify them, you can present the correspondence in court and ask the judge to hold your spouse solely liable for the additional charges.
If you apply for new credit in your name alone, the creditor does not have to know that you’re in the middle of divorce litigation. In fact, you don’t even have to wait until your divorce is final to try to secure credit in your sole name. If you’ve already separated but you’re not divorced yet, most states treat new charges during this period as the sole debt of the spouse who incurred them. An exception may exist if the charges are for necessary living expenses – some courts will divide these debts between spouses if your divorce isn’t final yet. In any event, the creditor doesn’t care who pays for the charges, as long as someone does.