It is always a major tragedy when a marriage ends in divorce. The breakdown of the family unit and the difficult adjustment for the kids (if there are any involved) is one of the hardest aspects about divorce. The difficulty of separating one house into two can be burdensome and tedious to say the least. You have to go from one checking account to two, two homes instead of one and separate accounts for everything from credit cards to utilities. This becomes a very difficult adjustment to make for the entire family.
In any divorce situation there is a splitting up of assets between the two parties. This is likely to include credit card debt as well because this plays an important part in the general financial picture for many families today. To the credit card company, the family credit card is the property of that shared entity which was the marriage. So when the union dissolves, the transition, from a financial point of view, of your credit card accounts is one that does not happen overnight, and can be a very long, drawn out process.
So one of the many issues that needs to be discussed and planned is how to separate the credit card debt. Whoever continues to hold the family accounts in their respective name will continue to get those bills, and that individual will be expected to pay them. Now the least preferable way to handle the debt is to roll the payments into any forced settlement agreement such as child support. When the divorce does reach a conclusion and becomes final, the amount of the debt and the payments that must be made could be calculated, and half of that total put into the amount that the income-generating partner must provide.
But that leaves the management of the credit card debts to one partner while the other one just pays a set amount. Additionally, if the credit cards are used by either partner, the legal amount would have to constantly be adjusted, and that would prove to be a constant headache of administration.
If the divorce is a shared responsibility so each spouse can work with the other to adjust the financial picture in an advantageous way, then how to separate the credit card debt should be part of that planning. Part of that planning is how to use shared assets to pay down the debt. You may have a home, retirement accounts or other assets that were set aside for the future of the marriage. An option to consider would be to close those accounts or sell assets, and distribute the funds equally. These monies can be used to retire the shared debt.
It's likely some of the debt load will live on past the divorce. In those cases distributing it into two individual accounts may be the best option. For example, if the family was carrying $10,000 in debt, if each marriage partner walks away with $5000 of the debt this would seemingly be fair and equitable. How each individual handles the split debt is up to them.
There are two ways you can go about splitting the credit card debt. If the debt is with a credit carrier with whom you can negotiate and conduct a dialogue, getting a meeting or having a conference call with the managers would be productive. The credit card company would far rather negotiate with you on how to handle this debt load than deal with it chaotically after the fact. So the actual splitting of the credit card debt may be coordinated by the credit card company itself.
But you can always use the method many of us have used to manage credit card debt up until now. Each of you could set up new separate credit card accounts. You no doubt have dozens of credit card offers you can use to initiate this process. In many cases, part of the set up offers for these accounts are balance transfers. So if you take out individual accounts and use the balance transfers to move each partner's share of the debt to those accounts, this may be an effective way to split the debt.
Adjustments may need to be made to the 50-50 split idea based on many factors but especially on which partner generated the bulk of the household income, and which partner generated the actual debt load in question. But by negotiating the terms of how you are going to separate the credit card debt when you dissolve the marriage, you will be dealing in a mature and responsible manner within an already very tough and tense situation.
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