Creditors really don't care how marital property and debt are divided in a divorce. They continue to hold both spouses responsible for repaying any debts charged to joint accounts. Unfortunately, how your spouse handles her finances can affect your credit standing long after the divorce. It only makes sense then to take the necessary steps to separate financially from your wife once you file for divorce.
Your wife is responsible for paying off any charges she makes to an individual account in her name. The account will appear on her credit report. However, if you are an authorised user on that account, the account may appear on your credit report as well. In equitable distribution states, even if only one spouse incurs the debt, both spouses can be held jointly responsible for credit card debt that benefited the family as a whole. Yet the court often considers which spouse has the higher income when allocating marital debt. If you live in one of the nine community property states, you will be liable for a portion of any debts your wife incurred while the two of you were married. Whether you live in an equitable distribution or community property state, any debts that your spouse incurred individually before you got married are her sole responsibility.
Freezing Joint Accounts
You have several options available to you when deciding what to do about credit accounts your spouse can access. If you and your spouse applied together for an account, both of you are obligated to repay the debt, even if your divorce agreement assigns specific debt obligations to each of you. However, if your spouse is simply listed as an authorised user on an account you opened, the credit card company will hold you responsible for any charges she makes. You can close an account unless it still has a balance. In that case, you can freeze the account to prevent your spouse from making any future charges. The drawback is that you won't be able to use the account either.
Ask your spouse to transfer her portion of any debts charged to joint accounts to her own individual accounts. That way she will be responsible for paying what debt is hers. If she isn't willing to transfer some of the debt, keep all joint accounts current while the two of you are negotiating a divorce settlement. Pay all accounts on time, even if you only make the minimum payments due. Late payments can hurt your credit; so keep any joint accounts that will be your spouse's responsibility after the divorce current as well. It's better to make the payments yourself if you have to rather than have missed payments negatively impact your credit rating.
In many cases, couples who are divorcing agree to divide their marital debts equally with each spouse responsible for paying off certain debts. However, if you earn more than your wife, you could offer to pay off more of the debts in exchange for receiving additional equity in the marital home or a retirement plan. When negotiating a divorce settlement, the assignment of marital assets and debts can get complicated and have long-term effects on your finances. Consider your options carefully.