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Understanding how debt can impact a military divorce

The division of marital assets is a primary focus for most divorcing spouses, in Colorado and across the nation. Property division can be complicated, especially for military families in which there are complex retirement and other benefits to consider. One of the biggest mistakes that spouses can make, however, is to fail to consider the role that debt plays in a divorce. Debt must be divided much the same as assets, and the effects of that division can have a lasting impact.

A divorce agreement is only binding to the parties listed within. That means that, even if spouses agree to divide existing credit card debt, the credit card issuer is not obligated to comply with the terms laid out in the divorce agreement. As far as the credit card company is concerned, any party listed on the account can be pursued for payment, if that need should arise.

This can become a problem if the spouse who is tasked with paying down existing debt falls into financial trouble and is unable to make good on those obligations. In such cases, the creditor will pursue the other party listed on the account for payment. That could lead to credit score damage, as well as an inability to secure new lines of credit.

In order to fully separate debt, it is necessary to have creditors alter the account to show only the party who is taking on responsibility for that account. Some creditors will do so, but many others will refuse. In that case, the only way to create a clear and permanent separation is for the debt to be paid off in its entirety. That could require the liquidation of other assets, which is an issue that should be negotiated in the property division stage of a Colorado military divorce.

Source: The Huffington Post, "Divorce and Credit Card Debt", Justine Borer, April 3, 2017

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