It can take quite some time for divorcing spouses to negotiate an agreement regarding the division of their property and financial obligations. Those who can’t agree will end up litigating their divorce. While Hawaii state law requires fair or equitable solutions, it is quite common for both spouses to have their own idea about what would be fair that does not align with the other’s perspective.
People aren’t always quite sure what will happen when they file for divorce and they worry about their financial resources and responsibilities. As a result, access to credit cards and credit card debt are frequently points of concern in modern divorces that may end up becoming contentious under certain circumstances.
It is common to close and freeze accounts
Given the significant risk of someone engaging in financial misconduct in the early stages of divorce, it has become common practice for the courts to close or freeze joint accounts when someone files for divorce.
That can lead to temporary financial hardship as people find themselves without the revolving credit they need to buy groceries or pay their insurance premiums for the month. Especially if someone did not expect the divorce filing, losing their lines of credit temporarily can be an inconvenience.
Couples have to divide account balances
Equitable property division rules apply not just to belongings like vehicles and furniture but also to debts, including credit card balances. For the most part, couples will need to find a way to fairly split what they owe to their lenders.
People may negotiate to take responsibility for specific accounts or might even give up their interest in certain property if their spouse takes control of the debts attached to those assets. It is crucial that spouses recognize that a family court order dividing the debts won’t necessarily protect them from collection activity and credit consequences if the person who should pay the account misses payments or defaults.
For many spouses who are contemplating divorce and are worried about debt, a thorough review of household finances and some degree of flexibility when negotiating a property division settlement may be necessary for an optimal outcome in their divorce proceedings. Understanding the Hawaii approach to shared debt can benefit those who are preparing for property division negotiations and/or family court hearings alongside their attorneys.