Navigating Credit Card Debt During Divorce

How Should you navigate credit card debt during a divorce? Our Lending expert, Sandy Cutrone, CDLP from Krimat Financial Learning Center joins us every month at our Second Saturday Workshop (there are still spaces available, register here) In this guest post she talks about Credit Card Debt.

Navigating Credit Card Debt During Divorce: What You Need to Know

Divorce is never just emotional—it’s deeply financial. Among the most misunderstood and damaging aspects of the financial separation is credit card debt. Who’s responsible? How does it affect your credit? Should you close joint accounts? What if your spouse racks up more debt before the divorce is final?

In this issue, Krimat Financial Learning Center breaks down what divorcing couples need to understand about managing credit card debt, protecting their credit profile, and planning their financial futures with clarity and confidence.

🏛 Understanding Credit Card Liability in Common Law States

Most U.S. states operate under common law. This means credit card debt is typically the responsibility of the person who signed the credit agreement.

• If your name is on the account—even as a joint user—you’re legally responsible.
• If your spouse runs up balances on a joint account, you can still be pursued by creditors.
• A divorce decree does not change the creditor’s right to pursue you.

Best Practice: Close or refinance joint accounts before the divorce is finalized, or include clear protections in your agreement.

⚖️ Special Rules for Community Property States

In Community Property states (CA, AZ, NV, TX, LA, ID, WA, NM, WI), both assets and debts acquired during the marriage are presumed shared equally.

• Even debt in only your spouse’s name may be shared liability.
• Courts may divide this debt equally regardless of the account holder.
• Debts after separation may be treated differently depending on state law.

Caution: Don’t assume you’re protected because the account isn’t in your name. State law may say otherwise.

🧾 When Debt Is Assigned to One Spouse in the Divorce Decree

One of the most dangerous assumptions is that a judge assigning a debt to your ex means you’re safe. You’re not.

• Creditors are not bound by divorce decrees—only you and your ex are.
• Missed payments still impact your credit if your name is on the account.
• Either party may be pursued by the creditor for payment.

What You Can Do: Close or separate joint accounts, and monitor any remaining ones. Work with your attorney to add indemnification clauses.

📊 How Divorce Affects Your Credit Report

Divorce won’t show up on your credit report—but the financial fallout will.

• Joint accounts with missed payments
• High balances from legal fees or separation costs
• Fraudulent activity or new accounts by your ex
• Mortgage/HELOC activity tied to marital property

Tip: Monitor your credit reports regularly. Look for accounts still active or missing changes you expected.

💡 Common Financial Mistakes Divorcing Couples Make

• Leaving joint accounts active
• Not understanding how state laws impact liability
• Assuming the divorce decree is enough
• Ignoring credit reports during separation
• Not planning for post-divorce financing and DTI changes

✅ How a Certified Divorce Lending Professional (CDLP®) Can Help

At Krimat Financial Learning Center, we specialize in the intersection of divorce law, credit, mortgage lending, and financial strategy. As a CDLP®, I bring clarity and structure to your divorce finance plan.

Why Work with a CDLP?

A Certified Divorce Lending Professional offers expertise in navigating complex divorce scenarios, including evaluating alternatives to refinancing. By engaging a CDLP early in the divorce process, you can:

• Explore all available options, including refinancing and loan assumptions.
• Set realistic timelines that avoid unnecessary legal and financial complications.
• Ensure compliance with lender and court requirements.

ESSENTIAL STEPS TO DETERMINE

REFINANCE REDINESS:

• Pull a full credit report at the outset of the case to assess the client’s creditworthiness.
• Set up a credit monitoring service (e.g., Credit Karma or similar) to track changes and ensure no negative activity occurs during the divorce process.
• Collaborate with a CDLP to analyze the client’s credit, income, and debt-to-income ratio.
• The CDLP can provide realistic timelines for refinancing based on lender requirements and market conditions.
• Get an Independent Property Evaluation from a CDRE Certified Divorce Real Estate Professional
• Work with a CDFL A Certified Divorce Financial Advisor who understands how to achieve equitable Settlements.

Reach out to Sandy directly through her website Or via phone at 719-417-8500