For Maryland residents contemplating divorce, there are probably many questions that need to be answered. A recent post delved into the property division aspect of divorce, questioning the role retirement accounts play in dividing up the marital property.
There are so many different aspects of this part of a divorce -- regardless of whether it is a simple or complex property division discussion -- that addressing everything in one post would be impossible. But there are certain things which may fly under the radar when a divorce is considered, and one of those is the issue of credit.
There are many different ways for a married couple to go about addressing their credit histories. Some couples like to maintain separate finances, whereas other couples have joint accounts and credit. When it comes to divorce, however, the fact that some things are separate and some are combined may not have the result you think it will.
When a couple has a joint credit account, it appears on each person's credit report. This is not the case when one spouse has an account and the other spouse is simply an authorized user. In this case, only the person with the account will be responsible for the debt on it -- not the authorized user.
One of the most common ways to address credit debt accumulated in a marriage during the divorce process is to divide it up between the divorcing spouses. However, a divorce court cannot change the terms of a credit account, and if each spouse is subject to a joint credit account, they are both 100 percent responsible for the amount owed, regardless of what the divorce court agreement says.
Dividing up debt and credit accounts can be one of the trickier parts of asset division during the divorce process. While in an ideal situation all spouses would be able to maintain separate finances, most do not. The reality is that people do not get married and then plan their finances as if they may get divorced. The best idea is to consult an attorney with any questions you may have before, during or after marriage.
Source: Yahoo! Finance, "6 Secrets About Joint Credit," Dana Dratch, June 8, 2012