While most people are familiar with the property distribution phase of a divorce, some may be unaware that debt and its repercussions can be also be divided between both parties. A Michigan divorcé(e) could potentially be found liable for a former spouse's unpaid credit card debt, damaging his or her credit score. However, experts say that such an outcome does not occur in every divorce case, but only when certain criteria are met.
Michigan family courts are required to divide assets and liabilities in an equitable, though not necessarily equal, manner. A divorcé(e) could argue in court that it would not be equitable for him or her to receive a portion of an ex-spouse's business debt on the grounds that he or she was not involved with the business or its finances. However, this can be hard to argue successfully since he or she was likely supported by income earned by the business.
Couples who have been married for many years are more likely so see themselves named responsible for their spouses' debts following a divorce. This is because they may have commingled their assets and jointly signed up for credit cards. Even though only the individual that signs for a card is held responsible for the debt, lenders could potentially claim joint bank accounts or other marital assets in the event of a successful judgment. This makes it useful for Michigan residents to ensure that their money is held in separate accounts in their name only. Individuals who write to their credit card companies and explain that they are separated from their spouses can find some protection from collectors, but this is typically not guaranteed.
When it comes to credit cards, even if a divorcé(e) lives in Michigan, it is likely he or she will be obligated to abide by the laws of the state where the credit card company in question is located. This can be a complex and stressful endeavor, making it worthwhile to consult with a financial adviser or qualified attorney.
Source: Fox Business, "Will my Husband's Business Card Debt Hurt my Credit After Divorce?" Elaine Pofeldt, Apr. 25, 2013