What Do We Do About Credit Card Debt in a Divorce? 

 Posted on November 26, 2024 in Division of Property

Divorce often brings financial challenges and credit card debt can add another layer to the complicated issues a couple needs to resolve. Many couples frequently find themselves asking how this type of debt will be divided during their divorce. Illinois law provides clear guidelines, but the process can still be complicated. An experienced Illinois family law attorney can help you decide how to manage marital debt in divorce and work toward a fair resolution.

Understanding Marital vs Non-Marital Debt in Illinois

One of the first questions most people have when confronting the issue of dividing credit card debt is whether they will have to pay for it. Whether both spouses are responsible for credit card debt that only one spouse spent depends on whether that debt is considered marital or non-marital. 

Illinois operates under an equitable distribution doctrine, meaning that property and debts are divided in a manner that is fair but not necessarily equal:

• Marital Debt: Debts incurred during the marriage, regardless of whose name is on the account, are generally considered marital debt. For example, if a couple used a credit card to pay household bills, this debt is likely marital.

• Non-Marital Debt: Debts acquired before the marriage or after legal separation are typically considered non-marital. Additionally, debts from personal purchases not benefiting the marriage may also be classified as non-marital.

If the Court determines that a credit card debt is marital, it will be subject to division between the spouses.

Factors Illinois Courts Consider When Dividing Debt

When determining how to divide marital credit card debt, Illinois Courts consider several factors, including the:

• Income and financial resources of each spouse

• Contributions each spouse made to the marital estate, including non-financial contributions like homemaking or caregiving

• Financial needs and obligations of each spouse after the divorce

• Dissipation of assets, such as one spouse recklessly or intentionally accumulating unnecessary debt

These factors help the court decide a fair distribution of credit card debt, which may not necessarily be a 50/50 split.

Couples who are trying to decide what to do with credit card debt during their divorce should note that a Court does not necessarily have to make a decision; indeed, Courts prefer a couple to make a financial settlement themselves and will usually only get involved once a couple has tried unsuccessfully tried strategies like mediation to reach an agreement. 

Managing Joint Credit Card Accounts During Divorce

Managing joint credit card accounts during divorce proceedings is critical to prevent further financial complications. Here are some steps to consider in consultation with your lawyer:

• Freeze Joint Accounts: To prevent one spouse from adding more debt, consider freezing joint credit card accounts as soon as the divorce is filed.

• Establish Separate Accounts: Open individual credit card accounts to cover personal expenses during the divorce process.

• Track Spending: Keep detailed records of all expenses to avoid disputes about marital versus personal debts.

• Pay Off Debts When Possible: If finances allow, paying off joint credit card debt before the divorce is finalized can simplify the process and reduce post-divorce complications.

Post-Divorce Considerations

Even after the divorce is finalized, both parties should monitor joint credit accounts. If your name remains on a joint credit card, creditors may hold you responsible for unpaid balances, even if the divorce decree states otherwise. Ensuring that your financial agreements are enforced and accounts are properly closed can protect you from future liability.

Contact a Mt. Prospect Family Law Attorney

If you are dealing with credit card debt as part of your divorce, the Rolling Meadows, IL divorce lawyer at The Law Office of Nicholas W. Richardson, P.C. can provide guidance tailored to your unique situation. We understand Illinois divorce law and can help you work toward a fair division of assets and debts. Call 847.873.6741 today to schedule a no-cost consultation with a team committed to helping you get a fair debt division in your divorce.