A common question for Wisconsin residents who are divorcing is whether they can be held financially responsible for a former spouse’s credit card debt. The answer may surprise some. Because Wisconsin is a community property state, a credit card company can pursue the cardholder’s spouse for credit card debt even if the spouse is not a joint account holder. The spouse is presumed to be jointly liable for the debt unless he or she can prove otherwise.
In a divorce decree, the court divides the former couple’s assets and debts between the two parties. If one spouse was incurring credit card debt without the other spouse’s knowledge and without the other spouse benefiting in any way from the expenditures, the court should be so advised. The judge likely will take these circumstances into consideration when allocating debt between the parties, particularly if the expenditures contributed to the end of the marriage.
Even though the court may allocate the credit card debt to one spouse as part of the property division, this may not get the other spouse off the hook for the debt as far as the credit card company is concerned. The court does not have jurisdiction over agreements the parties may have with third parties, meaning a creditor may try to collect from one spouse if the other does not pay, regardless of what the divorce decree says. Accordingly, it is important to make sure the credit card debt is paid off as a condition of the divorce settlement.
In the event that one spouse has incurred significant debt, the other spouse should take certain steps before divorce. First, document the status of all accounts held by the couple, including credit cards, mortgages, bank accounts and the like. Second, obtain a credit report to ensure there are no other unknown accounts. Close as many joint accounts as possible, making sure to comply with any conditions imposed by the divorce court first. Finally, a spouse may also want to consult with an experienced divorce attorney.
Source: Fox Business, “Is Wife Liable for Ex’s Card Debt?“, Sally Herigstad, May 07, 2013
