When couples begin the discussion about their financial portfolio in divorce mediation they often immediately think of their major assets: the marital home, retirement accounts, investments, and savings. However, addressing marital debt—specifically credit card debt—is just as crucial to securing a clean financial break and starting your new life after the divorce.
Unraveling credit card balances during a divorce can feel confusing and overwhelming. Divorce mediation offers a flexible, private, and practical way to resolve debt. New Jersey is an equitable distribution state. This means that marital property and marital debts are divided fairly, though not necessarily in a strict 50/50 split. You can choose to divide all assets and debts exactly 50/50, but you are not necessarily required to do so. You have some flexibility to make financial decisions that make sense for your individualized new future.
Generally, any credit card debt incurred by either spouse during the marriage for marital expenses (such as household bills, groceries/food, childcare, or family vacations) is considered joint marital debt—regardless of whose name is actually on the account. Commonly, most debt falls into this category. However, there are situations in which there is separate debt or nonmarital debt. Debt acquired before the marriage, or debt incurred after filing for divorce, typically remains the individual responsibility of the spouse who incurred it. Furthermore, sometimes debt is accrued strictly for non-marital purposes (such as gambling or pursuing an extramarital affair). This debt is usually assigned solely to the spouse responsible.
One of the most critical concepts to understand during debt division is the distinction between your divorce agreement and your creditor contract. Simply put, credit card companies do not care what your divorce agreement states. If an account is in your name (or if you are a joint account holder), the lender holds you legally responsible for paying that balance, even if your divorce agreement says otherwise. In divorce mediation, agreements are structured with specific statements about what will happen to joint debt. If your ex-spouse is assigned a card in your name and fails to pay it, your settlement agreement gives you recourse to seek reimbursement from them.
There tend to be four common approaches used to resolve credit card balances:
| Strategy | How It Works | Best Used When… |
| Pay Off via Asset Sale | Liquidate a shared asset (like selling the marital home or using liquid savings) to pay off all balances before finalizing the divorce. | Couples have sufficient joint assets and want a completely clean slate with zero lingering debt. |
| Asset/Debt Offsets | One spouse takes on all/a larger portion of the credit card debt in exchange for a larger share of a marital asset (e.g., keeping more equity or savings). | One spouse prefers no debt or immediate liquidity while the other has higher cash flow to manage monthly debt payments. |
| Balance Transfers | Transfer joint balances onto individual credit cards registered solely under each spouse’s name, then close the joint accounts. | Both spouses qualify for individual cards (or 0% APR balance transfer cards) to eliminate joint liability. |
| Structured Payoff Schedule | Agree on an explicit monthly repayment allocation written directly into the settlement agreement until balances reach zero. | Cash flow is tight, assets cannot be easily liquidated, and both parties need a clear timeline. |
Divorce mediation allows a couple to explore these frequently used options and so much more. You may feel like there is no way out of credit card debt. And it is often more expensive to live in two homes than one, so how will you get out from under this debt when your expenses are increasing? It is not easy, but it is possible. Divorce mediation allows couples to brainstorm solutions tailored to their specific financial reality. During the divorce mediation process, you can develop a plan that works for the both of you.
It is helpful to understand the credit card debt in order to address it. If balances are not paid off each month, then you need to account for interest as well. Step one is to run your credit report. We will review this during divorce mediation. You want to make sure that your credit report is correct. A person may not realize that the other person is an authorized signer on a particular credit card. During mediation we discuss the process and timing of removing an authorized users from a credit card that only one person is keeping.
If you have joint credit cards, you will decide if you are closing the account or keeping it open. Usually, parties no longer have any joint credit cards. Although sometimes parents like to retain a joint credit card to pay for child-related expenses. In this scenario the items allowed to be charged on the credit card and payment process will be thoroughly explored and noted in your divorce agreement.
In divorce mediation the parties will decide on a firm cut-off date regarding any credit card debt incurred by either party on the credit cards each person is retaining. Any charges made after this date are designated as individual debt. Each person will use only the credit cards in their own names (unless otherwise agreed upon) and that each party will be solely responsible for any charges incurred on the credit cards in his or her own name.
At Westfield Mediation, you have the ability to mix and match whatever strategies make sense for your personal situation to pay the marital credit card debt. It is an important step towards your own financial future.