Fox Family Lawyers
Cynthia Moseley Fox
Attorney at Law
7751 Carondelet Avenue,
Suite 700
Clayton, Missouri 63105
(St. Louis)

Protecting Yourself When Your “Ex” Stiffs The Credit Card Company

Last week, we met “Art”, who had a very unpleasant surprise two years after his divorce. His credit card company was suing him to pay off the balance on a joint card that he had with his wife while they were married and which he had closed as soon as he decided to end his marriage.


And, even though the judge at his divorce ordered his wife to pay off the balance, the credit card company was taking him and not his “ex” to court. As the company explained it, they were not bound by his divorce decree. He and his wife were both signatories on the account and each could be held liable. However, since his former wife continued to be up to her proverbial you-know-what in debt, the card company was going after him, always the high earner in the family.


Writing about Art’s situation has led me to reexamine how clients might be better protected. In every divorce decree, the couple’s marital assets and debts are divvied up between them. Typically, the person receiving an asset will also be assigned the debt associated with it. Whoever gets the home also has responsibility for the mortgage; whoever gets the car, gets the payment. Usually, the goal is a 50-50 split of all property and when it comes to any joint credit cards, the simplest approach is to make each party responsible for half of the couple’s total liability.


Most couples have several joint cards and the court will typically assign payment responsibility for some to one spouse, and responsibility for the remaining to the other. Most times, the parties pay off the balances and the other spouse is never affected.


Obviously, that’s not what happened in Art’s case. His ex-wife didn’t or couldn’t pay off one of her assigned cards. Could there have been a way to keep Art from taking the hit for some or all of the debt assigned to his wife? Probably not, given the common language of credit card agreements that makes each signer liable for the entire debt.


However, there may be a way, which I have not yet tried in a real case, to have Art compensated if he were to be stuck with the bill. The divorce decree would still assign joint debts to one party or the other, but it would also set a deadline by which the debt would have to be paid off or refinanced totally in the assigned party’s name. Until then, certain marital assets would be held in abeyance, and if that deadline were not met, then those assets would be awarded to the other spouse.


For example, the husband is assigned responsibility for a $5,000 credit card debt and provided 120 days to pay or refinance it. During that period, assets worth the same amount, such as investment accounts, a car, or some vacation property, would be conditionally assigned to the husband but not awarded to him. If he met the deadline, he would receive the assets. If he failed to perform, his wife would receive the assets.


Importantly, should the husband miss the deadline and forfeit the assets, his obligation to pay the debt, whether under the divorce decree or the agreement with credit card company, would remain as before, thereby giving him a double incentive to pay/refinance the debt by the deadline.


Family courts are very resistant to conditional property awards. For many good and practical reasons, they want their property divisions to be “final”. But, courts are also very interested in achieving equity between the parties and for that reason I think it’s worth a try.