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There are many reasons that people get divorced.  Finances or financial concerns are often a big factor when it comes to a divorce or separation. Whether it is the failure to earn income or enough income, reckless spending or disagreement on how assets should be allocated, financial friction can lead to the end of a marriage.  Often one of the spouse's may have run up significant credit card debt, sometimes without the other spouse's knowledge, or one may have credit card debt in his/her name and the other has none in his/her name.  This blog is written to very basically address how credit card debt is typically handled in a divorce or separation in Michigan.  If you have questions or concerns about your own personal situation, please do not hesitate to contact us to schedule a consultation either by clicking on this link or calling (248) 608-4123.

What Happens to Credit Card Debt in a Divorce in Michigan?

Oddly enough to understand how credit card debt is dealt with in a divorce, an explanation of property division is helpful.  Before the property is divided between the spouses, the property must be categorized as marital or separate.  Marital property is any property that is earned, purchased or otherwise brought into the marriage by either spouse while the parties are married.  Marital property is divided "equitably" or roughly equally between the parties.  Separate property is property that falls into a list of specific property that is considered solely the property of one party and it is not subject to division between the parties or offset by other property owned by either spouse.

Debt is pretty much treated the same way as property, any debt that is incurred during the marriage is considered marital and divided between the parties in a roughly equal or "equitable" manner regardless of whose name the debt is in.  There are also some specific types of debt, including those that may be charged to a credit card, that are considered the separate debt of one spouse.  What this means in most circumstances is that one spouse may have credit card debt on a credit card in their own name and that debt will be considered marital debt and divided between the parties.  This is often true even if the other spouse was unaware of this credit card debt.  So for example if Spouse A has credit card debt in his/her name of $10,000 and Spouse B has credit card debt in his/her name of $5,000, then usually each would keep the debt in their own name and Spouse B would have to pay Spouse A $2,500 either in cash or other assets to "equalize" the credit card debt. 

The above is a very simply explanation with a very simple example of how credit card debt is handled when people get divorced in Michigan.  If you have questions regarding your own circumstances, please contact us to schedule a consultation either by clicking this link or calling (248) 608-4123.