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In divorce proceedings? If joint credit is primarily in your spouse's name, you may find it difficult to obtain credit alone.
Important things to know about divorce decrees & credit. A divorce decree can endanger credit, and joint debts remain joint debts. Re-assigning debt in divorce decrees does not relieve a spouse of debt responsibility.
Joint debts remain joint debts. Both spouses signed a legally binding contract with the creditor, and a divorce decree neither amends this contract nor relieves the creditor's investment in you. Amendment of any contract requires agreement by all parties, including the creditor, and proof of the amendment requires the signature of all parties. During a divorce, the creditors are not part of the divorce courts, and therefore the original agreements/contracts stand.
If you have a joint financial obligation with your ex-spouse, and your divorce decree states that your ex-spouse is responsible, and your ex-spouse is delinquent on paying, your credit as well as his/hers is affected. As is stated above, your legal responsibility for a debt does not go away because a divorce decree assigns responsibility for a debt to your ex-spouse. Along with a legal responsibility to pay comes the right of the creditor to report a debt delinquent on your credit report if it's not paid as agreed in the original contract.
Especially tragic are situations where one ex-spouse files bankruptcy and includes many joint debts in the bankruptcy. The spouse not filing bankruptcy is left holding the bag for these joint debts, and many times they're not notified of the ex-spouse's filing until months or years down the road when it's too late to correct the situation. So not only is the spouse who didn't file responsible for the unpaid debts and can be legally sued for them, but the non-filing bankruptcy spouse's credit is also ruined, something that cannot be corrected, as the credit bureaus have the right to report them delinquent.
The purpose of divorce is to split off emotionally and financially from your ex-spouse. If you aren't careful, your spouse's handling of your once-joint accounts can haunt for years. If you had joint debts which existed before your divorce, and these accounts are not both paid off and closed, you're just asking for trouble. Also, although some divorcing couples are definitely out to get each other, most problems with joint accounts prior to divorce are caused by ignorance, not malicious intent. Don't think that just because your split is amicable that problems can't occur. Taking precautions can protect BOTH of you. Order a credit report and review all outstanding debts.
More credit articles related to divorce:
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When divorce happens it can affect both partners' credit and finances. Handling joint debts in a divorce can be very stressful when an ex-spouse decides to ruin your credit. It can be beneficial when partners establish their own accounts instead of having all joint accounts. Joint accounts can't be closed until they are paid off and all account holders are responsible for the debts. Joint account holders will be affected by any negative or positive information reported on credit reports.
If you are able to discuss debts decently during a divorce, you could divide the debts, pay them off and then close all joint accounts. Unfortunately many times one partner wants to ruin the other and will max out joint credit card accounts. They sometimes like their partner's credit to be ruined and they don't care if the debts are not paid. The best thing is to strive to close all joint accounts as soon as possible.
Creditors you owe are not bound by the court's decisions and will pursue the names on the account for the debt owed. The court will make a judgment if partners can't agree about debts. Many times one partner does not know that the other opened joint accounts. It is wise to order credit reports to check if your name is on any secret accounts without your knowledge.
Monitor your credit reports often during and after a divorce as your partner knows your social security number. They could try to get credit cards in your name or as a co-signer. Consumers get three free credit reports each year, one from each of the major credit bureaus. Order them and watch for unfamiliar accounts. Constantly monitor your reports until the divorce is over and you are sure accounts have been closed or separated. It can be a good idea to do it for a year after a divorce.
Having a credit card is beneficial so being a good financial manager can have its rewards if you are ever faced with a divorce and have joint accounts. Keep credit card debt to a minimum, have individual credit card accounts, limit joint accounts, and pay off debts in a timely manner to try to avoid some financial problems due to a divorce. Joint Credit Cards and Divorce
When it comes down to finances and joint accounts, a divorce can make finances a bit more difficult to manage. Consider closing all joint accounts. To do this, any balances must be paid in full or the account can't be closed. It can be an important step to avoid having to pay debts from an out of control spending spree by a mad joint holder whose goal is to get even. Cancel joint accounts in writing and be sure to request that they report each account as "closed by customer" to the credit bureaus.
Often couples divide their credit card debts and designate which each will pay. If the accounts stay in joint names and one chooses not to pay the debt, the company will still pursue all the joint holders for the debt. Credit card companies don't honor deals made between joint card holders. It is better to pay all debts and close joint accounts as soon as possible to prevent one person from maxing out credit card accounts.
Get credit reports from all three credit bureaus, Experian, TransUnion and Equifax, to get a view of any loan balances, mortgages and credit card debt that you have together. Be sure to check credit reports at least every three months after a divorce is over to correct any mistakes and monitor them for fraud and other incorrect financial information. Consider opening individual credit card accounts in your name before the divorce is final as it can be easier to get approved if your joint accounts have good credit history. Many woman have found themselves without credit after a divorce and have a difficult time establishing credit, so it can be very important to get credit before the end of a divorce. Marriage, Divorce, Credit
Whether you are getting married or getting a divorce, it is a good idea to know how both marriage and divorce can affect joint credit accounts. When applying for credit like a mortgage or credit card, you must choose an individual or joint account. For an individual account, your own income, assets, and credit history will be considered, whether single or married and you are responsible for the debt. The great thing is that you are in control of the account. It can be difficult to get approved for credit when you do not work outside the home, or if you work part time, or have a low-paying job. In this case it can be difficult to get approved for an individual account.
Joint credit accounts consider both spouses' financial income and credit history together and both are accountable for the debts. Credit history will appear on both of your credit reports. Joint accounts are usually easier to get approved. Both are responsible for the debt, even if you divorce and separate debt obligations. Credit card companies don't honor the court's decision to split the debts, they look at who is on the account and responsible for payments. A worst-case scenario is that an ex-spouse could jeopardize your credit history by being a joint holder and they could max out the credit card and never plan to repay the debt or care if credit history is bad. The best thing to consider when planning to divorce is to pay off joint account balances and close the accounts fast to prevent problems that can result in you getting bad credit. When thinking about adding a person as a joint account holder for loans and credit cards, make sure you can really trust them not to abuse the accounts and make debts that can't be repaid or late payments that lower your credit scores. Divorce Joint Credit
Getting a divorce could leave one spouse abusing a joint account. When this happens there must be some way to get a reluctant spouse off the credit card and out of the finances. In the event of a breakup, it is important to get started early on loose financial ends could be costly for a spouse.
Regardless of the woes of being in a divorce, creditors like credit card companies want to get paid. When both names are on the card, both spouses are responsible for paying the bill. The solution to the problem is to stop any added debts before divorcing.
The cardholder should contact the carrier and close the account by paying off any balances due. If you are an authorized user, ask to be removed. When there are balances on a card, the account can't be closed. Another option, if the balance is too large to pay off, is to ask for a “freeze” on the account until the balance is paid.
Make sure the card carrier contacts the major credit bureaus to document the account was shut down at your request. Always record the dates, times, and the person you talked to about your account. It can be a good idea to send a letter to confirm you requested your name be removed or for the card to be closed and send the letter by registered mail.
After a few months, check credit reports to make sure closed credit card accounts are listed as closed on reports. Closing an account could have a negative affect on credit scores but this can be one of the best ways to avoid other financial damages from a hateful spouse. Joint Marriage, Credit, Divorce:
Credit problems due to divorce are very common place with credit difficulties as a result. There may be some options to help protect credit if this happens to you.
* Let credit report agencies know when if you have legally separated or divorced. Get copies of credit reports once all is settled legally.
* Let creditors know what has taken place and if there is a name change be sure to let your lenders know. Make sure all records for bills, credit cards, and other financial institutions are updated with any new information.
* Close any joint accounts if you are able. Balances must be paid off before accounts can be closed. If they can't be closed, have the creditors freeze the account to prevent any new charges. Consider opening new accounts in just your name. Spouses often make out of control charges just to be spiteful and abuse account privileges during divorces. Creditors can seek payment from all persons on a joint account no matter what the court rules.
* Always make the required payments on joint accounts during the divorce so that credit will not be damaged. Try to pay any balances as soon as possible and then close the account. If you stop getting mail, check with your post office to see if a spouse put in a change of address for your mail.
* Be sure to monitor mail as an angry spouse may try to grab a pre-approved credit card application and apply in your name. By monitoring credit reports you can look for credit card inquiries you did not authorize.
* Get with a lawyer as soon as possible to try to discuss debt payments and how to handle those issues when in a divorce.
* Divorce has ruined not only lives but credit. Make sure you get prepared on all the details to help prevent your credit from being ruined by a mad spouse. Joint Marriage Divorce
It is best when your name is changed due to getting married, to make sure your existing creditors are updated about your new name. This helps prevent your credit history from being interrupted. It can also be a good idea to list your maiden name on new credit applications so that your full credit history is represented. When applying for credit like home loans or credit cards, you must choose between getting an individual or joint account.
When consumers apply for individual credit accounts, it is only that individual's income, assets, and credit history that will be considered, even if single or married, and you alone are responsible for the debt. The information about the account will appear on your own credit report. It may also appear on the credit report of anyone else you designate as an "authorized user" of your account. Sometimes one spouse's individual debts may appear on the credit report of the other.
The great thing about an individual account is that you are in control and no other person can have a negative impact on your credit record. The bad part is, if you are unable to get credit on your own, you may have to include a spouse to get credit. Those who do not work or only work part time can be at risk for not being able to get credit just in their name. Joint credit accounts consider both spouses' financial assets, income and credit history together and both are accountable for the credit and payments. By having joint accounts, information will appear on both of your credit reports. It is best when applying for any credit, to decide whether a joint or individual account will be best for you. Get free software to track and manage finances today. |
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