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Who pays the credit card debt in a Michigan divorce?

On Behalf of | Jun 18, 2023 | property division |

Many professionally successful adults in Michigan carry significant credit card balances because their profession requires that they put forward a very polished appearance. Spending habits and the pressure of debt can contribute to the decline of a marital relationship and complicate the divorce process.

It is common for divorcing spouses in Michigan to disagree about who should ultimately assume responsibility for their largest debts. What happens to credit card debt and similar financial responsibilities during a Michigan divorce?

What credit card debt is part of the marital estate?

When negotiating or litigating property division matters, couples in Michigan have to establish what is marital property and what is separate. In some cases, spouses can exclude certain debts from the marital estate because they represent dissipation. A spending spree the day before filing or a secret credit card opened to pay for adultery might be debts that won’t end up divided in the divorce.

For the purpose of property division, it is almost always the date when someone took on a debt that determines whether it is marital property. Credit card balances and even student loans taken on during the marriage will typically be part of the marital estate, while debts from before the marriage will remain the separate property of either spouse.

A judge could order someone to pay off certain accounts or to cover a portion of the balance of each account. They might also award one spouse more marital property and then also make them accountable for more of the marital debt. Unless the divorcing spouse is negotiating their own arrangements, there will typically be no guarantee of a specific outcome when navigating the division of debts and property.

What risks come with credit card division?

There are two main concerns that people have to address when dividing debt in a divorce. One is that they might end up financially overextended and unable to fulfill their monthly obligations on time. The other is that their spouse might potentially default on credit card debt, which might result in collection efforts or even lawsuits. The civil courts and creditors owed money will still hold the other spouse accountable even after a family law judge orders one spouse to pay the debt.

Therefore, it is often important for those with significant amounts of debt to use marital assets to pay them down rather than allowing the debt to carry over after the divorce, if possible. Understanding what responsibilities persist even after divorce may benefit those who are trying to plan for their financial future as they prepare for divorce.