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Jointly held credit card debt could be a liability in divorce

A divorce in Texas often involves untying the financial knots that bind spouses. While the divorce decree should determine who pays what debts, sometimes people need to take action on jointly held credit cards prior to the completion of the divorce process.

It is possible for one spouse to charge up a bunch of debts on a joint account. Regardless of the terms of a divorce settlement, the creditor will try to recover payment from both parties on the account. Ideally, splitting partners will pay off and close joint accounts as soon as possible. If an account cannot be closed, an account holder can request that the creditor remove the former partner as an authorized user.

The unfortunate situation could also arise in which one person must pay a delinquent bill to protect a credit rating. Even if a soon-to-be ex-spouse has committed to paying the bill, one might decide that the unpaid bill poses too great of a threat. Damage to a credit rating could impact someone's ability to get a car loan or buy affordable insurance.

With help from an attorney, a client could weigh these financial decisions while negotiating the terms of a divorce. Legal representation might be especially important when going through a high-asset separation. In such a situation, an attorney might need to defend or challenge the terms of a prenuptial agreement and monitor the valuation of business assets before the client signs off on a divorce settlement. Legal advice might also inform the client about potential tax bills that could arise after selling real estate or distributing the funds in a retirement account. If the two parties cannot reach terms privately, an attorney could litigate the divorce in court.

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