Credit line debt in a divorce.

Credit line debt in a divorce.

In a divorce settlement, the credit line incurred by both people what date is used to divide that debt.


If there is a line of credit and you are divorcing you need to review the loan documentation signed when you undertook the debt. Don't make any assumption that the debt is to be divided unless you are certain both names are on the line of credit. Further, if the line of credit is secured what assets secure it? Who will own those assets following the divorce? Once the facts are determined the negotiation process in the divorce will determine who will bear repayment responsbility. This is often decided as part of an overall property and debt settlement (too many people focus on dividing assets, but dividing responsiblity for debts is just as important). When negotiating the settlement bear in mind that even if the divorce settlement agreement provides that your ex should repay the line of credit, that may not bind the lender. If your ex defaults the lender may still be able to collect from you. Also, ask your divorce lawyer what might happen if your ex declares bankruptcy after the divorce, what happens to your ex's obligation on this line of credit or other loans and debts? It might just be safer to repay the joint debt and have you each take out your own separate debt for which you are each liable. This may avoid the risks that your ex defaults on debts you remain liable on.

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