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How credit card debt affects Texas divorce proceedings.

Monday, July 16, 2018

Credit cards are commonly used in Texas and throughout the country. Married couples frequently have joint credit card accounts, and both spouses utilize the cards and make payments as required. Of course, not all marriages last forever and some may end in divorce. A recent article addressed how Texas divorce proceedings can affect the couple's credit card debt.

The Equal Credit Opportunity Act prevents creditors from discriminating against any applicant based on gender or marital status. Previously, a woman might have had difficulty in obtaining credit on her own. However, in a community property state such as Texas, creditors may continue to ask about marital status even if the applicant is seeking separate credit. This is especially true if the credit will be secured by any jointly held property or assets.

The Credit Card Accountability Responsibility and Disclosure Act of 2009 (the CARD Act) asks creditors to evaluate the consumer's ability to pay back money borrow based on terms of the account. This was thought to hinder non-working, divorced or widowed women from securing cards with no credit history. A 2013 update made it easier for those who did not work outside the home to obtain credit cards.

Credit card debt liability depends on whether a state is one of equitable distribution or community property. In an equitable distribution state, any debt incurred while married is the responsibility of both parties if both are signatories to the account in issue. Since Texas is a community property state, both spouses are responsible for debt, even if it was incurred by one spouse.

Dealing with finances is a major component of any Texas divorce proceedings. It is important to safeguard one's financial situation and protect assets when going through this process. An experienced divorce attorney can walk someone through the complexities of the process and work toward achieving a favorable settlement in the proceedings.

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

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