credit cards in walletThis is the next post in a series of articles discussing Las Vegas, Nevada divorces that are caused by a spouse’s financial irresponsibility. My previous post discussed Nevada’s community property laws in general and explained how their application may impact a divorce proceeding. With some exceptions, debt and assets acquired during the course of a marriage are treated as joint marital property. This means that both spouses have an equal interest in the assets and equal obligation for the liabilities. It is important, therefore, to identify reckless spending behaviors quickly and take action necessary to protect your financial interests. If divorce is the only answer, an experienced attorney can help you understand how you may be impacted. In this post, I will focus specifically on the division of credit card debt incurred by one spouse during a marriage. If you need assistance, contact my office to speak to an attorney.

As stated above, debts incurred by the couple while they are married are considered the obligation of both parties under Nevada’s community property laws. When the parties cannot reach an independent settlement regarding the division of their marital debts and assets, the Court will attempt to divide marital property and marital obligations equally between each party. This applies to financial liabilities that are incurred by one spouse, whether or not the other spouse was aware that the debt was being created and even if it resulted from completely irresponsible spending by one party alone. For some, it may be difficult to imagine how this could happen. Consider, however, how easy it is to access credit cards, offering high spending limits at significant rates of interest. A reckless spender can very quickly rack up tens of thousands of dollars on clothing, jewelry, travel, restaurants, shows, cash advances, and more. If their partner is not aware that their excessive spending is being funded by credit cards, they may be shocked to discover a large amount of debt, and more shocked that they may be responsible for partial repayment pursuant to their divorce decree.

Consider the following example. When Lucy and Pat begin dating, Pat is gainfully self-employed as a consultant, making significant income. Pat takes Lucy on several extravagant trips, sparing no expense, and pays for everything. After they are married, Pat continues to spend money on lavish meals, clothes, etc., and primarily supports them financially. Pat fails to mention to Lucy that he lost his primary client and his income has seriously declined. In order to keep up their lifestyle, he begins using their joint credit card regularly to supplement his spending. He intends to pay the card off when his business bounces back. Pat reaches the $20,000 spending limit on the joint credit card and is forced to open additional cards while he attempts to rebuild his business, incurring $15,000 balances on each. By the time Lucy learns about the problem, the couple has credit card debt totaling $50,000. The financial stress caused by Pat leads the couple to divorce. Despite the fact that Lucy was not aware that Pat was using credit cards or the amount of the spending, the Court would likely consider the credit card liability to be marital debt. This means that Lucy’s equitable share of the obligation would be $25,000.

Divorces can be emotional and extremely stressful. This is particularly true when one party is left holding the bag for a credit card and other significant debt created by their partner. Understanding how these behaviors may potentially impact divorce proceedings or future financial health is critical when dealing with a financially irresponsible person. I have experience representing Las Vegas residents in divorce cases and negotiating favorable settlements of marital assets and debts. If you need assistance, contact my office today to speak with a lawyer.