Dear Credit Card Adviser, I got divorced recently. My husband left me with two kids and a lot of credit card debt. About 90% of charges for the last year he did for his traveling and business purposes. He is the primary cardholder and I am an authorized user. I am willing to pay everything that I charged, but he wants me to pay half. Am I responsible for his charges as well? -- Lena
Dear Lena, I'm sorry to hear about the tough situation at home. Divorce is hard enough emotionally without factoring in the financial impact.
But it's important to consider your personal finances as you're going through a divorce. Keeping your credit history unmarred and your debts as low as possible will help you to set up a stable and secure home on your own.
With that said, let's tackle your credit card debt issue. In most cases, you are not liable for the debt on a credit card if you are listed as an authorized user. Only individual and joint account holders are responsible for the charges on credit cards. While it's diplomatic for you to pay for what you charged, the issuer will only go after your husband (and not you) for repayment.
Debts get a little messier in the nine community property states. Those are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In general, debts incurred during a marriage are considered joint debts, even if one spouse never signed onto the loan or credit card. That means you and your husband are responsible for all the charges on the credit card, no matter who made them. It may be prudent to ask if any of your husband's business expenses can be reimbursed by his company or written off to reduce the overall bill.
It's a good rule of thumb to decouple any credit card accounts during divorce to protect the credit of both parties. It's easy for authorized user credit card accounts. The account holder simply calls the issuer and asks to remove the authorized user from the card. If the account holder forgets to call, typically the authorized user can request to be taken off the account. At the very least, the authorized user can contact the credit reporting bureaus to dispute the account on his or her credit report.
The situation gets a little stickier when both spouses are joint account holders on a credit card. The best strategy is for both parties to pay off the card together and close the account before finalizing the divorce. Or, consider transferring the debt on the joint card to a credit card in one spouse's name and closing the original account.
If both names stay on the account, but only one person is supposed to pay, remember that no divorce decree trumps the contract you have with the issuer. That means even if your divorce settlement states that your husband pays for a joint credit card, you're still responsible for the debt even if he doesn't pay.
If you have a joint account, safeguard yourself by including in your divorce decree that your spouse must let you know if he expects to miss a payment on it. That way, you can pay it and keep your credit from taking a hit.