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Family Law, Military Divorce, Professional License Defense In Carmel, Indiana

2 ways credit cards can complicate high-asset divorces

On Behalf of | May 25, 2023 | divorce

Couples that have significant property to divide often experience conflict during divorce proceedings Real property, investment accounts and other personal holdings may trigger intense disagreements between divorcing spouses. Sometimes, both spouses want to stay in the marital home. Other times, they disagree about how much of their retirement savings should be subject to division in the divorce.

The most valuable property that spouses hold often become the focal point of conflict, but their obligations can also influence the final property division determinations. For example, credit cards are often a complicating factor in high-asset Indiana divorces.

People often disagree about what debt they have to share

The rules for property division include consideration of marital debts, like the balances owed on credit cards. However, spouses often disagree about how much credit card debt should be part of the marital estate, especially if one spouse went on a pre-filing spending spree or used a shared account to buy expensive dinners for their affair partner. Many divorcing couples will have a hard time agreeing on what debts exactly they have to divide in their divorce and also how they will divide those debts.

Credit card rewards can lead to disagreements

Maybe the family has a travel rewards card with multiple plane ticket reimbursements already earned and not yet redeemed. Perhaps there is a cash-back card where the family saves rewards until the holiday season to then spend on gifts. Higher-income households tend to have higher-value credit card reward programs, some of which may offer thousands of dollars in benefits annually.

Couples may have to review the value of those rewards and negotiate how to divide them. They may also have to discuss how to clothes or transfer the credit card accounts during the divorce to avoid the loss of those rewards due to premature account closure.

The more complicated a family’s financial circumstances are, the bigger the challenges they may face when they start preparing for divorce. Considering how credit cards can lead to divorce challenges might help those who are beginning the preparation process for an upcoming divorce filing.