Couples preparing for divorce in Colorado must address their property and debts. They split up the property that they share. They also need to make arrangements for paying their mutual financial obligations.
Many spouses have thousands of dollars in shared credit card debt. They may both have their own cards that draw from a shared line of revolving credit. Even personal credit cards held in the name of one spouse may be part of the property division process when spouses divorce. Any balances accrued during the marriage may be the responsibility of both spouses.
What impact do credit cards generally have on the property division process overall?
Balancing other decisions
Frequently, the amount of credit card debt that one spouse accepts has a direct impact on other details of the property division process. Spouses who accept responsibility for more debt might retain more of their shared property as well. Those seeking to protect major resources often take responsibility for more debt to make the overall property division outcome as fair as possible.
Diminishing the marital estate
Carrying a balance forward after divorce is not always the safest decision. It can be difficult to manage payments while paying for all of the household expenses that the spouses previously shared.
One spouse could face major complications if the other defaults or files for bankruptcy. Spouses may choose to pull funds from shared financial accounts or liquidate a portion of their home equity to pay off their joint debt and move forward with a clean slate.
Credit card debts can play a key role in the overall distribution of assets and obligations during the equitable property distribution process. Understanding the likely impact of credit card debts on divorce proceedings can help people prepare for property division negotiations.