Allocating credit card debt is part of the process of ending a marriage

A divorce can become contentious over the issue of how to properly allocate debts acquired by the spouses during their marriage.

Credit Card Insider observes that divorce is sometimes messy not just because of the emotional aspect but because of the fact that a divorce has the potential to "wreak havoc on both parties' finances." Nevertheless, "divvying up the financial liabilities" of an ending marriage is part and parcel of the property division process. Debt division can be as contentious-if not more so-than a division of a Washington couple's community property assets. This should not be surprising since divorcing couples ready for a fresh start are not especially eager to shoulder any more of the marital debt than they need to.

One type of debt that couples sometimes fight over during the course of a divorce is credit card debt. According to Nerdwallet.com, credit card debt is the third largest source of household indebtedness trailing only mortgage debt and student loan debt. The average U.S. household credit card debt stands at $15,480. NPR reports that more than one-third of those with credit card debt have been reported to collection agencies due to defaulting on their payment schedules.

In Washington State, all liabilities, just like assets, must be divided when dissolving a marriage. If the parties cannot agree between themselves about how to divide the marital debts, a court will make the decision for them. As with assets, liabilities will be divided by the courts in a manner that is just and equitable under the circumstances. As illustrated by a 2014 Washington appellate court case, a spouse's mismanagement of credit card debt during the marriage could lead a court to allocate a higher debt load to that spouse upon a divorce.

The Awwad case

In In re Marriage of Awwad, a wife had-with her husband's permission-charged $15,000 on the couple's joint credit card in 2010 for a ring. The ring was a gift for the wife's mother in honor of her 50th wedding anniversary. By late 2012, the husband had paid $10,568.24 on the credit card debt leaving $9,573.19 still owing. According to the trial court, the husband had made the decision to pay off the debt in small monthly installments even though he had the financial means to simply pay the debt in full. As a result of the small monthly payments, $5,000 of the credit card debt was now unnecessary accrued interest. The trial court concluded that the husband should, under the circumstances, be responsible for the remaining credit card debt incurred from the purchase of the ring.

On appeal, the Court of Appeals of Washington observed that a husband and wife owe each other the duty not to waste and mismanage co-owned assets. Upon a divorce, said the court, conduct which has squandered marital assets can be taken into account in allocating assets and liabilities. If wasteful conduct occurs, a higher debt load can be allocated to the "wasteful marital partner." Finding that the husband had negatively impacted the household finances by unnecessarily incurring $5,000 in interest charges, the appellate court concluded that it was fair that the husband be allocated the remaining credit card debt attributable to the ring purchase.

Seeking advice

The division of property and debt upon divorce is often complicated. If you are contemplating a divorce, you should contact a Washington state attorney experienced in family law matters as soon as possible. The attorney can provide you with the clear legal guidance you need in order to make informed decisions about how to strategically approach the divorce.

Keywords: credit card debt, property division, divorce