Money and Divorce When You’re Not a Celebrity

0
Money and Divorce

Source: Getty

The Hollywood set is basking in the latest news out of the Kardashian camp. Turns out, Kim Kardashian gave birth to hers and Kanye West’s first baby. Sweet, right? I thought so too, but then, I saw another headline: Kardashian Divorce Final. Many believed the divorce between Kardashian and hubby Kris Humphries had long since been finalized. In fact, Huffington Post announced the divorce was final this past April. Clearly, there’s a problem surrounding both the money and divorce was actually finalized; however, regardless of which date is actually right, she still became pregnant before the legalities were settled.

The Real World

Anyone else in the “real world” would likely still be battling it out in court. Some judges taken adultery quite seriously. And while Kardashian didn’t exactly betray Humphries (they separated after just 10 weeks), those pesky dates could have resulted in big problems for the reality personality. For someone who’s a star via questionable avenues and despite her fairytale wedding, she put a lot on the line by becoming pregnant with another man’s baby. In fact, many thought for sure there’d be more to it, especially considering the bitterness out of the Humphries camp. The now ex-husband accused Kardashian of fraud with the sole purpose of earning millions off of the…ahem…blessed event.

Murdoch Divorce

There’s another money and divorce scandal brewing and it could become one of the most expensive in American history. You may recall Rupert Murdoch’s infamous divorce that cost him more than $1 billion. That was big by 1999 standards and even today, it’s still considered astronomical. But it’s nothing compared to the $3 billion that’s on the line for Harold Hamm, CEO Continental Resources. And there’s one reason why this could happen: the absence of a prenup. If this comes full circle, Hamm’s wife, Sue Ann, will instantly become one of the top wealthiest women in the nation. Not bad for a 25 year haul.

Most of us will never have to worry about multi-billion dollar settlements, but there are important factors any divorcing couple should be aware of. Marriage is a beautiful thing, but if couples could just step out of the heady excitement before the wedding and put themselves in the mindset of a divorcing couple, they might could better justify a prenup. If you’re thinking you’ll never get divorced, remember, everyone says they’re never getting divorced.

That brings us to the credit card debt most couples have. This type of revolving credit is one of the biggest sticking points in divorces, too. Who pays the balance? Who actually gets the credit card? There are always a lot of questions and below, we try to answer them with, of course, our typical disclaimer. You should always consult an attorney if these problems present themselves – we offer advice, but for guidance, you should seek legal representation.

Money and Divorce

Banks, credit card companies and other lenders see divorcing couples every day. It’s the worst scenario for them, especially considering the risk it puts them in. Remember, they’re in business for one reason: to make money. They don’t care who gets the proverbial “custody” of the accounts, they just want the payments on time. Just like the decisions they made to lend the money to you and your spouse, now that you’re going through a divorce, they’re still focused on assets and debts.

On the other hand, the courts tend to take a different perspective and will often order the primary account holder to take responsibility for the outstanding balance. These days, it’s not uncommon for married people to keep separate financial accounts; in fact, close to half of all married couples have separate financial entities. It works out great for the banks and card companies as these separate accounts put into sharp focus who’s responsible for the debt. The other half, though, is considered joint credit. That’s where it can get a bit confusing. When you then couple your state’s laws, it gets stickier is that while a fairly large percentage of married couples keep separate accounts – both bank and credit card accounts alike (some statistics show that about 48 percent of married couples keep separate accounts2) – many others open joint accounts instead.

Joint Debt

Joint debt almost always is hashed out before a judge. Even when there is a clear primary account holder, it doesn’t necessarily mean that person is the one who pays off the debt. Most courts divide the debt to ensure a degree of fairness. That said, if a judge believes one spouse was at a severe disadvantage, such as watching a spouse gamble the retirement money, he can order payments be made by the one who clearly run the debt up.

If it’s become a battle, you might wish to consider ordering copies of your credit history and also contact the credit card company for a printout that allows you to memorialize all of the times the debit or credit card was used in casinos and other similar environments. It could mean the difference in how financially stable you are after the divorce.

Even if the parties are still in the transition phase, ideally they can come together with the agreement of how the debt should be handled in the meantime. Even making minimum payments ensures your credit scores aren’t affected.

Finally, don’t forget to document everything, especially all of your communication after the divorce was filed. This is the time to do it. If you can keep a level head with an eye on how decisions today can affect your future, you’re going to better serve your purposes. While most of us will never have to worry about divorces on the Kardashian level, it’s always good to go into these difficult times with the mindset that anything can happen.

What do you think? Is it easier for the average Joe to get a divorce from the missus? What recommendations would you make to improve the legal sector when it comes to divorce, credit card debt and student loan debt?

Share.

About Author

David is a CPA and has spent the past decade as a financial adviser helping clients meet their fiscal objectives. With an appreciation for journalism, he has spent the past few years overseeing several financial columns as well as writing two previous finance blogs. He resides on the East Coast with his wife and two sons and has guided many through the recent recession while providing a no-nonsense approach to spending and saving.


Few Credit Card offers from our Partners

No Credit History or Minimum Credit Score Required for Approval; Monthl...


More Info

Save 30% on H&R Block software; Receive your Tax Refund faster; Get FRE...


More Info

Advertiser Disclosure

CREDIT DAD is an independent, advertising-supported website. Many debit cards, credit cards and other financial offers that appear here are from companies from which CREDIT DAD Websites receive compensation. This compensation may impact how and where products appear on this website (including, for example, the order in which they appear). CREDIT DAD Websites do not include all card offers in the marketplace.

Advertiser Disclosure

CREDIT DAD is an independent, advertising-supported website. Many debit cards, credit cards and other financial offers that appear here are from companies from which CREDIT DAD Websites receive compensation. This compensation may impact how and where products appear on this website (including, for example, the order in which they appear). CREDIT DAD Websites do not include all card offers in the marketplace.