Joint credit card debt after divorce - who pays credit card bills? |
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Facts about joint credit card debt after divorce. A divorce decree may declare which spouse pays credit card bills, but divorcing does not relieve either party.
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. Settle joint credit card debt
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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.
Read our article about joint debt.
More marriage and divorce credit articles for: joint mortgage loan joint auto loan joint credit cards
Credit Card Debts And Divorce
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. Five Ways Spending Leads To Debt Debt Relief
Debts can cause mounting late fees and high interest rates so the best plan is to get debt relief as soon as possible. By ignoring debts, the amount owed will increase with added fees. Review all details about your debts, list the loans you owe and other bills. Figure out how much you are in debt and start on a budget. Figure how much you make, how much you need for basic living expenses, and how much you can pay toward debts.
When you need more money for debts you must either make more money or save some from your regular income. Anytime you have a few extra dollars, put it in an account and use it to pay down your debts. Many times consumers refinance their mortgage and get a loan to pay off debts. This can be a good plan if you don't pay off debts and make new debts. Instead, pay down your mortgage with any extra money until the mortgage is paid off. Don't ever risk taking out mortgage loans and risk loosing your home if you have any doubts about repaying the money.
Some consumers get debt relief by using money in their IRA (Individual Retirement Accounts) but this can have a negative effect on your future. When you withdraw from your IRA, you can loose your tax deferred returns. If getting debt relief is beyond your expertise, consider getting a free quote from a debt relief professional. Let them tell you some debt relief choices that you can consider. The important thing is not to delay and get deeper in debt. Credit Counseling for Debts
Some consumers are not sure if they may need credit counseling assistance. When there are many debts from various creditors, it may help to get some advice on consolidating debts or on spending habits. Doing this may help with making life more simpler and being able to get finances back in control.
If there is a time when an application for an auto loan, mortgage loan, or cell phone is rejected, it may be sign that credit is bad. If a loan is approved but at a high interest rate, your credit reports should be reviewed to gain an understanding about problems with your credit. Bad credit only leads to loans with high fees or even being rejected for loans. With some simply monitoring of credit scores and working on rebuilding credit, it is possible to get credit with low interest rates.
When there are problems paying monthly bills on time or in full, consider contacting a credit counselor for help. It takes self discipline and some organization skills to keep debts on the right track. When debts are not managed, credit scores can be affected fast. Credit counseling can help to improve those who have less than perfect money management skills. Credit counselors have tons of tips and advice about debts. Debt Plan
It takes motivation for every goal to be a success and being in debt needs motivation to get out of debt. Changing habits is hard but without changing careless spending habits, getting out of debt will not happen. Debt comes with a lot of stresses but breaking the chains of debt must start with a debt plan or a goal.
Either get debt help from a professional or trying getting out of debt by yourself. No matter which way you choose, you must prioritize debts and decide which ones you will payoff or which ones you will begin to pay extra money toward every month. It will take motivation, planning, and setting goals to get out of debt, leaving debts to chance can only leave you further in debt.
When getting extra money for debts through family and friends is not an option, you must find the extra money in your budget to pay debts. You will not be able to get all the things in life you want, but with a budget you should be able to figure in money for the things you need the most. Start off by paying more than the amount due on each debt or plan on paying more than is due on the debt with the highest interest rates and late fees. Monitor statements to get further motivated by seeing the debt being reduced each month. Don't make any new debts until other debts are paid in full even if it takes some time.
Try to figure out which accounts to pay and in what order they need to be paid to avoid any late fees. Be sure to decide how much to pay each month to get each debt paid in a specific time frame. For small debts, you may be able to pay them off in a few months to a year. For larger debts it may take a couple of years. Without a plan, you are spending money at a whim but by setting goals you have a mind set about what you need to do to get out of debt. Make sure to monitor all statements each month to help keep you motivated and in control. Debt Relief Plan
When debts are out of control, the first thing to do is to learn to plan a budget and stick to it. Take time to examine cell phone bills for added features like the Internet, texting, and high calling plans and lower the bill. Shopping and eating out are another two areas that can drain income and add to having debts. It is easy to make charges on a shopping spree and bored, later to find yourself without money to pay the mortgage or auto note. Learn to stay home and bond with family for a few months to have more money to pay down debts.
It can help to make a list of debts and keep the list with you. Set a goal to pay off the debts on the list as soon as possible. When there are temptations to waste money, pull out the list and motivate yourself to avoid needless spending to be able to get out of debt sooner. Consider refinancing a mortgage to have more money to use to pay off other debts. This will not work when a person is unemployed, it is not helpful to pay down debts when there is not even money for basic expenses like food, housing, and utilities. Getting a job is necessary to be able to have money in life. Contact friends and family and let them know you need to earn money. They may hire you to do errands, sit with children or the elderly, or do some chores so you can earn money.
When in a bind, get financial counseling. There are credit counselors who can give free or low cost debt help. Once you have a plan to get out of debt, be aggressive with accomplishing the goal of eliminating debts. Try paying off small debts first to feel a sense of accomplishment and motivation that can help you eliminate debts one by one. Just like anything else, it takes work to be free from debts. Prioritizing Debt Payments
When you must pay secured and unsecured debts like loans and credit cards, you may need to decide which of those debts should be paid in order of priority. Choosing to pay the wrong debts could be costly and cause financial problems. Debts like the mortgage, property taxes, home insurance, federal and state taxes, medical bills, auto loans, student loans, and credit cards are all important debts. However, when there is only so much money, setting a priority may be necessary.
* Making a mortgage payment should be first on the list to pay. That would include second mortgages, home equity loans, and home equity lines of credit as all attached to your home. If you default on a mortgage payment, the bank can foreclose on the home and auction it. If a bank sells your house for less than what is owed, the bank can still pursue you for the difference. Defaulting on a mortgage could cause credit scores to drop which could cause some difficulty for renting a home.
* Property taxes are debts that should not be neglected. If they are not paid, a tax lien could be placed on your home. If your property is seized, you would owe back taxes and still owe the mortgage.
* Homeowner’s insurance can be hard to get a good rate. If the insurance policy is canceled because payments are not paid or paid late every month, your lender will purchase insurance for you and add the premium to your mortgage payment. This could cost you more money.
* An auto loan payment may be just as important as a mortgage payment. If you fall behind on payments, the lender could repossess the car, auction it off, then send you a bill for the difference. Consider an auto as an asset that gets you to and from work.
* Federal and State income taxes should be on the priority list. If you have assets, the IRS (Internal Revenue Service) can take them or put a lien on them. In some states they garnish your wages - which could be grounds for termination. Some examples of assets are: your house, auto, boat, RV, bank account, rental income, and interest payments. Your state revenue department can sue you, garnish your wages, and place a lien on your assets.
* Don't neglect to pay any federal student loans like a Direct or Stafford loan. The IRS can take your tax refunds to cover the payments or wages could be garnished. Then you may not be able to get other federal loans like student loans and housing loans.
* Medical Bills that are not paid could be turned over to a collection agency who could sue you. A lawsuit could get your wages garnished or a lien put on your assets. In addition, if you plan to use the doctor or facility, you may be prevented until the debt is paid.
* Lastly, prioritize credit card debts and other unsecured debts in order from highest interest rate to lowest interest rate. When these debts are not paid, the credit card company will first try to get you to pay the debt. Then, they will contact a debt collector and finally, the card issuer may sue you and ask the court for permission to take one of your assets or garnish your wages.
When facing financial difficulties, it is important to prioritize debts when something must be paid late. Paying credit card debts could be at the end of the list but they should be paid. For extreme debt problems, don't wait until debts keep mounting, seek out a credit counselor or consider debt consolidation or debt settlement as options. Debt
Millions of consumers are knee deep in debt and are having trouble paying their bills. Some of the signs may be a mailbox full of notices from creditors and accounts being turned over to debt collectors. Stressful days and the fear of losing a home or auto does not help. Most consumers must deal with a financial crisis at some time in their lives. It could be caused by illness, the loss of a job, overspending, or for other reasons. The important thing is not to let it go from bad to worse and get out of hand.
Finding a realistic budget, credit counseling, debt consolidation, debt settlement, or worse, filing bankruptcy are some ways people deal with debts. What will work usually depends on the level of debt, deciding which option is best for your needs, and setting goals and sticking with them to pay off debts.
It can be helpful to write down all expenses and track all spending. Find out just where all the money is going. How much is spent to make ends meet for basic living expenses and how much is just wasted on junk. Do some research at a public library or bookstores about budgeting and money management methods. If you have computer software programs on maintaining a budget, or balancing a checkbook use them to try to get on the right track with your finances.
Contact creditors immediately when you can't pay and ask for a lower payment plan or a couple of months of not paying until you can catch up bills. Be sure to tell them any hardships you had that have caused late payments or not being paid at all. Try to get them to work with you on a new payment plan. Never wait until accounts have been turned over to a debt collector, when this happens, creditors have already given up on getting paid. Review our free personal budget software. Debt
Some think that getting into debt is one way to try to become richer. This could be due to an old saying that you "must spend money to get money." Many people are broke because they are in deep debt and may not ever be able to get out of debt without some plan. Debt then binds a person to never have any financial freedom to be able to use their money to save or change their life for the better.
About 75% of Baby Boomers have mortgage debt and over half have some credit card debt. Of course about half also have car payments too. It takes discipline and sometimes help to be able to conquer debt problems. It may be that, instead of having a huge mortgage or auto payment each month, a person may need to down size to be able to save more money to pay off debts. If money is needed for retirement years, more must be saved from the income that is generated during the year.
Many consumers buy a home, an auto, and make thoughtless purchases that leads to being in debt. Using credit cards as a tool and then never paying them off, adds to debts that later have high interest rates and late fees, which equals more debt. But when credit cards are used in a responsible manner, they can be the best tool for purchases to get cash back or track expenses. Make sure when seeking credit, you understand the debt amounts that you will be responsible for that must be repaid. Debts must be within a manageable budget plan. Free quote for debt relief.
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