Who pays off the credit card debt in a divorce?

Many people who are getting divorced in Phoenix are eager to separate themselves from their marital partner and move on to a happier, single life. 

Many clients come in with a mindset focused on how the division of property will go. But they are often uninformed as to how Arizona views splitting up a divorcing couple’s property. And while spouses may have an idea about who’s getting what—which car, what furniture, and even who keeps the pets– they may not realize their break up also involves dividing their debts, not just their assets.  

State laws differ regarding dividing marital property in a divorce.  Arizona is one of only nine community property states. Community property states will classify a couple’s property into either marital/community property or separate property.
Any assets acquired or earned by either spouse during the marriage are deemed to be marital/community property and legally-owned equally by both spouses. This includes the spouses’ incomes, purchased or acquired property or assets, retirement and pension accounts, and debts – – and collectively the court will make every effort to divide the property as close to equally as possible between the parties. 

Separate property is not only property one partner acquired before the marriage but can also include property one spouse obtained during the marriage– such as inheritances, gifts, personal injury awards, and debt incurred before the marriage. Sometimes, spouses take action with respect to property that would have been considered separate, but as a result of that action the property is considered marital/community property. Examples would include bank accounts or real estate originally held by one spouse to which the other spouse is later added.

Dealing with joint credit card accounts can be complicated because – – regardless of what the couple agrees to or a judge orders – – it doesn’t affect the couple’s contract with the credit card company. Because the credit card company extended credit to both parties, its contractual right to pursue either or both spouses on the account is not impacted by an agreement between the parties or a divorce degree that states only one spouse would be responsible for the debt. So, it’s important that the divorce decree “include indemnification clauses which can stipulate liability and consequences for failure to pay”. Depending on their particular situation, divorcing couples may be advised to contact credit card companies in an effort to transfer balances on joint accounts to a new individual account and then close the joint one. 

If you are considering getting divorced, have been served with divorce papers, or have questions regarding any family law matter, Cohen Family Law can help you. Contact us today for a free consultation. 

From our office in Phoenix, we help clients throughout Arizona resolve family conflicts through mediation, arbitration, or when necessary, litigation.