Why is that so important? A jointly held card is reported on the credit reports of both you and your ex-spouse. If your ex fails to pay bills on time, the damage ruins your credit too.
Worse, said Hardekopf, is that you are jointly and separately liable for any balance on that card. The divorce court does not have jurisdiction over existing contracts with your credit card companies. So even if the court says your ex is supposed to pay that bill, the creditor can come after you to collect. If an account is left open, your ex can add more debt and leave you holding the bag.
Not fair? True. But if you don't cancel the cards upfront, you'll be left to argue about it, possibly in court (again) later.
It's also important to check student loans.
Many student loans are issued in just one name and payable by just one person. But if you incurred private student debts while married -- or if you cosigned on your spouse's loan -- they may be joint obligations. Traditional student debt is low-cost and flexible and generally the last debt you want to pay off. However, you might want to pay off or refinance any private student debt to clarify repayment obligations after the divorce.
Auto and home loans also become an issue in divorce.
You don't necessarily want to refinance a home loan if you have a good rate, and you might not be able to refinance a used automobile. If you have these debts, you may want to try to modify them with your lender.
Typically, this requires the lender to look at your new, single financial statements and determine whether you can afford the payments on whatever income you'll maintain, whether that's from work or spousal support.
Another thing that can have enormous effect in a divorce is if one spouse files for bankruptcy protection.
Gary Leibowitz, a Los Alamitos bankruptcy attorney, says he's increasingly getting referrals from divorce lawyers who realize that their clients have more debts than assets. In these cases, it's often necessary to file for bankruptcy in conjunction with the divorce, he said.
And if one spouse is in bankruptcy, Leibowitz maintains that it would be foolish not to have the other look closely at filing too. The reason: all those joint debts.
"Any debt that was incurred during the marriage is joint debt," he said. "You could have divided up $100,000 in debt and then one spouse files bankruptcy and gets their $50,000 discharged.
"That leaves the other spouse with the whole obligation because that debt was never really divided. The [divorce] court doesn't have the jurisdiction."
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kathykristof24@gmail.com
Kathy M. Kristof is a personal-finance author and syndicated columnist.
