When a marriage comes to an end, it’s always a tragedy. Of course the rending of the family unit and the difficulty for the kids is the hardest thing about separating at divorce. But the difficulty of separating one house into two can be difficult and tedious to say the least. You have to go from one checking account to two, two homes instead of one and separate accounts for everything from credit cards to utilities.
The is an additional overhead to how to
handle a divorce situation if in addition to splitting your assets, credit card
debt that may have been a part of the shared family financial picture also must
be split up. To the credit card company,
that family credit card is the property of that shared entity which was the
marriage. So when the union splits up,
the transition from a financial point of view of your accounts separating is
not over night.
So one of the many issues to be discussed
and a plan made for is how to separate that credit card debt. Whoever continues to hold the family accounts
will continue to get those bills and be expected to pay them. Now the least preferable way to handle the
debt is to build the payments into any forced settlement agreement such as child
support. So at the time the divorce is
final, the amount of the debt and the payments that must be made could be
calculated and half of that put into the amount that the income generating
partner must provide.
But that leaves the management of those
credit card debts to one partner and the other one just has to pay a set
amount. And if the credit cards get used
by either partner, that legal amount would have to constantly be changed and
that would prove to be a constant headache of administration.
If the divorce is a shared responsibility
so each spouse can work with the other to adjust the financial picture in an
advantageous way, then how to separate the credit card debt should be part of
that planning. Part of that planning is
how to use shared assets to pay down that debt.
You may have a home that will be sold, retirement accounts or other
assets that were set aside for the future of the marriage. Before you sell those things, close
those accounts and distribute the funds, look at using the outcome to retire
that shared debt.
But it’s likely some of that debt load will
live on past the divorce. In those cases
splitting into two individual accounts may be the way to go. In that way, if the family was carrying
$10,000 in debt, if each marriage partner walks away with $5000 of the debt,
that is at least fair and equitable and how each individual handles that debt
is up to them.
There are two ways you can go about
splitting the credit card debt. If the
debt is with a carrier with whom you can negotiate and conduct a dialog,
getting a meeting or having a conference call with the managers there would be
productive. The credit card company
would far rather negotiate with you how to handle this debt load then deal with
it chaotically after the fact. So they
may be willing to set up separate individual accounts and split the debt for
you.
But you can always use the method many of
us have used to manage credit card debt up until now. Each of you can set up some new separate
credit card accounts. You no doubt have
dozens of credit card offers coming in that you can use to kick off this
process. Almost always part of the set
up offers for these accounts are balance transfers. So if you take out individual accounts and
use the balance transfers to move each partners shared part of the debt to
those accounts, that would be a clean way to split the debt up.
There may be adjustments to be made to the
50-50 split idea based on who is the primary bread winner and maybe who ran up
the debt and on what. But by negotiating
the terms of how you are going to separate the credit card debt when you
separate the marriage, that will be one more than that you are handling in a
mature and responsible manner in the middle of a very tough situation.
For more info about divorce, divorce-related issues and steps in filing for divorce easily, try to check out TexasTwoStepDivorce.com and visit their website at http://www.texastwostepdivorce.com
