Most married couples use credit cards as one of many financial tools to help their household to maintain the highest standard of living possible. Credit cards can cover unexpected expenses and budgetary shortfalls when income is lower than usual. They can also allow people to accrue rewards on purchases they would need to make anyway.
People tend to depend on their credit cards even if they simply need to know that they have financial flexibility to pay for major vehicle repairs or other expenses using their revolving lines of credit. Unfortunately, if couples in Indiana decide to divorce, they will likely have some challenges related to their credit cards.
The sudden closure of lines of credit
In scenarios in which there are only shared financial accounts or where there are concerns about the possibility of financial misconduct, people may move to freeze or close shared lines of credit in the early moments of a divorce. That sudden closure can leave someone without the financial flexibility they need to tackle sudden expenses, like setting up an apartment somewhere. Those planning for divorce often open at least one credit card in their own name that won’t be subject to immediate closure because of the divorce filing.
The need to split debts
Credit card debt, like other financial obligations, will be a part of the marital estate for divorcing couples in Indiana. They either need to reach an agreement with one another about who will pay the credit card debt and how or ask a judge to include those financial obligations in the marital estate during litigation. Even when there is a court order requiring that one spouse pays certain credit cards, they may fail to do so, which could potentially impact the credit and finances of the other spouse.
Disagreements about rewards
In some cases, people may need to arrange to cash in or withdraw credit card rewards before closing or freezing accounts as part of a divorce. Other times, they will arrange to have those rewards transferred to one spouse. Higher-value rewards cards can potentially cost hundreds of dollars a year but produce thousands of dollars in financial benefits that couples will need to disclose and potentially negotiate about during their divorce proceedings.
Preparing ahead of time to conquer challenges related to credit cards during a divorce may help people put together a more realistic financial plan for the division of mutual debts and other related concerns.
