 |
 |
 |
 |
 |
 |
 |
 |
 |
|
|
|
|
 |
Credit and Divorce
Mary and Bill recently divorced. Their divorce decree stated that Bill would pay the balances on their three joint credit card accounts. Months later, after Bill neglected to pay off these accounts, all three creditors contacted Mary for payment. She referred them to the divorce decree, insisting that she was not responsible for the accounts. The creditors correctly stated that they were not parties to the decree and that Mary was still legally responsible for paying off the couple's joint accounts. Mary later found out that the late payments appeared on her credit report. If you've recently been through a divorce-or are contemplating one-you may want to look closely at issues involving credit. Understanding the different kinds of credit accounts opened during a marriage may help illuminate the potential benefits-and pitfalls-of each. There are two types of credit accounts: individual and joint. You can permit authorized persons to use the account with either. When you apply for credit-whether a charge card or a mortgage loan-you'll be asked to select one type. Individual or Joint Account Individual Account: Your income, assets, and credit history are considered by the creditor. Whether you are married or single, you alone are responsible for paying off the debt. The account will appear on your credit report, and may appear on the credit report of any "authorized" user. However, if you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin), you and your spouse may be responsible for debts incurred during the marriage, and the individual debts of one spouse may appear on the credit report of the other. Advantages/Disadvantages: If you're not employed outside the home, work part-time, or have a low-paying job, it may be difficult to demonstrate a strong financial picture without your spouse's income. But if you open an account in your name and are responsible, no one can negatively affect your credit record. Joint Account: Your income, financial assets, and credit history-and your spouse's-are considerations for a joint account. No matter who handles the household bills, you and your spouse are responsible for seeing that debts are paid. A creditor who reports the credit history of a joint account to credit bureaus must report it in both names (if the account was opened after June 1, 1977). Advantages/Disadvantages: An application combining the financial resources of two people may present a stronger case to a creditor who is granting a loan or credit card. But because two people applied together for the credit, each is responsible for the debt. This is true even if a divorce decree assigns separate debt obligations to each spouse. Former spouses who run up bills and don't pay them can hurt their ex-partner's credit histories on jointly-held accounts. Account "Users" If you open an individual account, you may authorize another person to use it. If you name your spouse as the authorized user, a creditor who reports the credit history to a credit bureau must report it in your spouse's name as well as in yours (if the account was opened after June 1, 1977). A creditor also may report the credit history in the name of any other authorized user. Advantages/Disadvantages: User accounts often are opened for convenience. They benefit people who might not qualify for credit on their own, such as students or homemakers. While these people may use the account, you-not they-are contractually liable for paying the debt. If You Divorce If you're considering divorce or separation, pay special attention to the status of your credit accounts. If you maintain joint accounts during this time, it's important to make regular payments so your credit record won't suffer. As long as there's an outstanding balance on a joint account, you and your spouse are responsible for it. If you divorce, you may want to close joint accounts or accounts in which your former spouse was an authorized user. Or ask the creditor to convert these accounts to individual accounts. By law, a creditor cannot close a joint account because of a change in marital status, but can do so at the request of either spouse. A creditor, however, does not have to change joint accounts to individual accounts. The creditor can require you to reapply for credit on an individual basis and then, based on your new application, extend or deny you credit. In the case of a mortgage or home equity loan, a lender is likely to require refinancing to remove a spouse from the obligation. For More Information If you need additional help during this time of financial stress, please call Cindy Morus at 541-387-2995. She's been through it, too. Cindy S. Morus (www.phelps-creek.com) is a Certified Financial Recovery Counselor specializing in showing women and their families how to achieve financial well-being and peace of mind. She is also a Certified Credit Report Reviewer and Get Clients NOW!? licensee. Contact her at 541-387-2995 or cmorus@phelps-creek.com She is also the publisher and editor of "Financial Fitness", an internet gazette dedicated to helping people improve their financial fitness no matter what decisions were made in the past. Attention Ezine editors/Site owners: Feel free to reprint this article in its entirety in your ezine or website as long as you leave all links in place, do not alter the content and include our resource box as listed above. If you do use the material please send us a note (cmorus@phelps-creek.com) so we can take a look. Thanks.
MORE RESOURCES:
Google News |
 |
|
|
RELATED ARTICLES
Contested And Uncontested Divorce A divorce case is contested if the parties cannot agree on every one of the issues involved in their particular situation. Common areas of disagreement include, but are not limited to: grounds for divorce, custody of the children, visitation rights, division of the assets of the marriage, child support, maintenance (alimony), payment of family debts, contribution toward educational expenses (college or parochial), payment of health insurance for the dependent spouse, income tax structuring, etcWhen a divorce case is filed, it is given an identification number and is deemed by the court to be a matter that will ultimately require trial time in order to resolve all issues. Divorce--Negotiating Agreement: Ten Steps The best predictor of a good divorce outcome is the degree of client control over the negotiation--everything works much better if you have it. This doesn't mean you should not get help and advice from an attorney if you want it; it means you are better off if you plan to do most or all of the negotiating yourself. 5 Things To Do Before You Even Think About Getting A Divorce There are many steps to take to protect yourself in a divorce. This article will get you started. How To Protect Your Life Insurance Policy While Going Through A Divorce Life insurance, more than most things you buy, relates to the circumstances of your life. You buy life insurance to protect your family from financial loss stemming from your death. How Can Collaborative Law Be Beneficial In Your Texas Divorce? Collaborative law is based on the realization that the commitment by the parties in a family is that it is in their best interest to avoid going to trial.This process relies on open and honest communication and cooperation between the parties and their lawyers to achieve a fair result. 10 Ways to Keep Divorce Lawyers From Ruining Your Life Everyone has heard the story (from friends, co-workers, and family members) of the divorce from hell; the one that grinds on for years, costs untold thousands of dollars, and frustratingly plods its way through the court system. It costs people not only their marriage, but often their children, their savings, and their emotional well-being, as well. Getting a Jewish Divorce in the UK What is the Get?The Get is the Jewish form of divorce. The husband and wife must co-operate in obtaining the Get. A Time of Grief and Healing After Separation and Divorce I thought I would never feel the light of life again when I realized that my marriage was going to end. In fact I went through a painful year of not knowing if it would end. Five Christmas Survival Tips For The Divorced & Single Parent For the over 50% of marriages that end in divorce, Christmas can be a hugely trying time.Since the season is one of the most stressful times of the year anyway, this onslaught of raw emotion to the divorcee can be overwhelming. Women And Divorce: How Women Should Protect Themselves Financially Regarding Divorce Women who believe a divorce is a possibility or who think that their husband will be asking about getting a divorce at some point should put their emotions aside and plan "just in case" their intuition is correct that a divorce may be coming in the near future. If women who believe that the "divorce discussion" may be lurking, they should make it a point to look for solid signs that their husband will indeed ask for a divorce. Divorce Articles: How To Get The Most From A Divorce Article There are many types of divorce articles available on the Internet by a variety of authors. What's below will help you get the most out of the divorce articles here on this site and anywhere else. Commitment Being marriage means being fully committed to your husband as to the Lord. Look at Ephesians 5:22 it says Wives, submit to your husbands as to the Lord. Why Men Wont Commit To Marriage A common reason why men wont commit could be due to their past. Men wont commit if they have witnessed their parents in the past arguing or rowing. Divorce Decision: Things To Consider When Making A Decision About Divorce When making a divorce decision, there are quite a few things that you should consider. Too often people find themselves unable to clearly identify what they need to think about when making a divorce decision which leads to further indecision and frustration. Divorce: Secrets To Coping With A Divorce Announcement During a wedding ceremony, when people are joined together in matrimony, they swear and vow to honor and respect each other and to remain partners both during good and bad times.But in most marriages, this is not always the case. Love and Marriage Fairy Tale When we were children we believed in fairy tales and happy ever after endings just like Cinderella, Snow White, Sleeping Beauty and many other fairy tales. However, as we grow older, we soon realise that situations in real life do not always turn out as we would of expected our fairy tale to. Divorce--The Five Obstacles to Agreement This article and my articles "Overcoming Obstacles to Agreement" and "Negotiating Agreement" are about how to deal with disagreement--from simple difference of opinion to active upset and anger--and some specific steps that will help you reach an agreement. As you will see, the things you can do yourself are far more effective than anything a lawyer can do for you. Divorce, The Hardest Thing You Have To Do Knowing What To Do In DivorceKnowing what to do when you are faced with a divorce is often hard to figure out. But, you can and you will get through it. Surviving Life After Divorce After divorce, the most important thing you can do is to move forward sensibly. Here are ten steps to help you on your way back to a fulfilling life. Two Hearts Are Now One It is fitting that I should write this story on Valentines Day, for this is a story of two broken hearts; healed and mended, then melted together as one--in an instant. This is a story of True Love.
|
|
|
 |
 |
