Credit Card Debt

Bergen County Attorney Experienced in the Property Division Process

In addition to marital assets, marital debts must also be divided during a divorce. This issue should be given special attention, particularly when it comes to unsecured debts, such as credit card debt. If you and your spouse have credit card debt, or other secured or unsecured debt, Bergen County property division lawyer Brian D. Iton can give you valuable advice on how to structure future debt payments and allocate responsibility for payment of the debt. Mr. Iton represents clients throughout Northern New Jersey who need a debt division attorney to protect their interests.

Allocating Credit Card Debt During a Divorce

Surprisingly, figuring out who is responsible for marital credit card debt upon divorce is not complicated. First, it should be noted that the New Jersey courts use a broad definition of what constitutes marital debt. If a wife or husband has a habit of spending a lot of money on shopping, or travel, or one of their hobbies, and they have done this throughout their marriage – the debts incurred are usually considered marital not separate debt. What will make credit card debt incurred during the marriage separate is if it is outside of the ordinary spending pattern of the marriage. For instance, if as the marriage is deteriorating one spouse suddenly spikes their credit card usage on out of the ordinary expenses, the debt incurred may be considered that spouse’s separate debt.

If suddenly, your spouse is taking trips that they didn’t take previously, or shopping for expensive items that are out of the normal realm of your household spending, these purchases can be excluded from marital debt. Similarly, if one spouse starts taking large cash withdrawals from the credit cards, and the cash cannot be traced, the debt incurred can be considered separate.

Once the parties define what debt is marital and what debt is individual, separate debt the issue of how to pay back the debt has to be resolved. First, it should be noted that credit card accounts are individual accounts, which means that while credit card companies allow card-holders to apply for additional cards, such as for spouses or children, the primary card-holder is legally responsible for any legitimate debt created by any valid card-holders. When it comes to debt collection, the credit card company will go after the account holder regardless of how a divorce order or settlement agreement allocates the debt. For that reason great care must be taken in drafting a settlement agreement that protects the credit card debt account holder.

For credit cards solely in one spouse’s name that have a marital debt balance the best payoff method is for the spouse whose name the card is in to receive a monthly amount from the other spouse to be directed towards their portion of the debt until the balance is paid off. If the account is in one person’s name with the other person as an authorized user, the authorized user’s access to the account can be terminated. For truly joint credit cards which were issued in both parties names, the preferred method of dealing with paying back the credit card debt is first to close the credit account so that no more charges can be placed on the account. Then one party should be designated as the party to receive the monthly payments and send them to the credit card company, with proof of payment to the other party.

Whatever payment practice is agreed upon it should be set up to protect the account holders from adverse financial consequences such as collection actions and negative credit reporting. There should be monthly accountability as to whether the debt payments were made on time, or at all, and there should be a provision in the settlement agreement that deals with the consequences of failing to make timely payments.

Discuss Your Situation With a Property Division Lawyer in Bergen County

During a divorce, the last thing that you want is to not deal with outstanding credit card balances. If at the time of divorce each spouse has roughly equivalent marital credit card debt the parties may not need to devote much attention to the credit card debt payoff issue. If, however, there is a credit card debt imbalance there will be a need to fairly allocate how much will be paid by each party, and the proper method of paying the debt will need to be agreed upon. . For a free consultation on credit card debt issues with a knowledgeable Bergen County attorney, contact Brian D. Iton toll-free at (844) 431-3380, or use our online form to set up a free appointment. Brian D. Iton represents people who need a divorce lawyer throughout Bergen, Essex, Passaic, and Hudson Counties, including in Hackensack, Newark, Paterson, and Jersey City.