When a couple in Minnesota decides to end their marriage, their assets and debts must be go through the property division process. When it comes to joint credit cards, this can be complex, as a credit card in some cases can be considered an asset and in other cases it can be considered a liability.
One of the first questions divorcing couples with joint credit cards may be concerned with is who is going to end up with the debt. Each state has its own laws regarding property division. In some states, the debt may simply be split down the middle. In other states, property and assets are divided equitably, which means one party may receive more debt than the other if that party also was awarded more assets than the other. When it comes to dividing credit card debt, the court may consider who the primary account holder is or may even examine what purchases were made and by whom.
Once credit card debt is divided, it is important to supply credit card companies with the court order indicating who is responsible for the debt. Otherwise, the credit card company may still find that both parties are responsible for the debt. This means that if one party doesn't hold up to his or her obligation to pay the debt, the other party could still be responsible for it, despite what it says in their divorce decree.
Of course, these days certain aspects of a credit card can actually be viewed as an asset. For example, airline miles or cash back rewards may be highly sought after assets by both parties. However, keep in mind that some of these programs do not allow the points to be transferred to a person who is not the primary account holder, even if the parties have agreed otherwise. If that's the case, the party who is ineligible to receive the points may be awarded other assets, to make things even.
In the end, dividing credit cards, like dividing any other asset or liability takes careful thought. Sometimes parties are able to reach a resolution regarding property division on their own, but other times they must turn to the court if an agreeable solution cannot be reached. In either case, each party may want to retain an attorney who can represent that party both in the negotiation process and in court.
Source: Nasdaq, "Credit Cards And Divorce: What You Should Know," Dec. 2, 2016