Couples going through a divorce process usually think about the division of assets such as the house, retirement accounts, and cars. However, the debts that have been incurred during the marriage process need to be settled, too. The debts that usually become a major point of contention during the divorce process involve credit cards. Many people do not realize that the Indiana courts have the power to settle debts, such as credit cards, when deciding how to divide assets.
Knowing how credit card debts are settled during an Indiana divorce process can help you secure your financial future and avoid surprises after the divorce is complete.
Credit card debt can be considered marital debt
Indiana uses the principle of equitable distribution in the division of marital debts and properties. This simply implies that the division of debts and properties by the court is fair but not necessarily equal.
In most cases, credit debts that were incurred during the marriage are regarded as marital debts even if only one spouse is the account holder. This is particularly true if the debts were incurred for the family’s needs or for the purchase of items for the family.
Some examples of marital debts that may be incurred by a couple on a credit card include the following:
- Grocery bills and utility bills
- Purchase of items for the family’s needs, such as items for the children
- Travel and purchase of items for the family’s needs
- Medical bills and other debts that the couple incurred together
Courts consider several factors while dividing debts
When determining who should be responsible for credit card debt, the Indiana courts consider a variety of factors. These include:
- Who incurred the debt
- What was the debt spent on
- Income and earning potential of both parties
- Did one spouse squander marital assets
- Distribution of marital property in general
For instance, if one spouse was using a credit card for luxury goods or secret spending, a court might assign a larger portion of that debt to one spouse.
On the other hand, if a credit card was used to purchase general household expenses, a court might assign the debt more evenly between the two parties.
Creditors are not bound by divorce decrees
A major aspect that people tend to overlook is that the divorce court order does not change the original agreement with the credit card company. If you and your spouse are joint holders of a credit card, the company can still collect the debt from either party, even after a divorce court order.
What this means is that even if your spouse does not pay the credit card balance, which was allotted to them during the divorce, the credit card company can still try to collect the debt from you or your spouse.
It is for this reason that many attorneys recommend paying off joint credit cards during the divorce process.
Talk to a Danville, IN, Family Lawyer Today
Chris Arrington represents the interests of Indiana residents during their divorce. Call our office today to schedule an appointment, and we can begin preparing your case right away.