Credit Card Debt and Divorce

Mary and Bill recently divorced. Divorce, the regulation said Bill would pay the balances on their three joint credit card accounts. Months later, after Bill neglected to pay these accounts, all three creditors, tax Maria. They referred to divorce, which does not require you to be responsible for the accounts. The creditors correctly, that were not parties to the decree and that Mary was still legally responsible to repay the couple's joint account. Maria then discovered that the late payments appeared on her credit report.

If you have recently experienced a divorce - or are contemplating one - you can look closely at credit issues. Understand the different types of credit accounts opened during a marriage may help illuminate the potential benefits - and challenges - of each.

There are two types of credit accounts: individual and joint. You can allow authorized persons to use the account with either. When you apply for credit - whether a credit card or a mortgage - you will be asked to select one type.

Individual or joint account

Individual customers: Your income, assets and credit history is considered a creditor. If you are married or single, you alone are responsible for getting out of debt. Account appears on your credit report history of credit, and may appear to all users "authorized". However, if you live in the real estate market, the state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin), you and your spouse may be responsible for the debts during the marriage, and individual debts the other spouse may appear in the credit information.

Advantages / Disadvantages: If you work outside the home, work part time, or have a low-wage employment, which can be difficult to demonstrate a sound financial situation, without your spouse's income. But if you open an account in your name and are responsible, no one can negatively affect your credit.

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 this debt is 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 June 1, 1977).

Advantages / disadvantages: the application that combines the financial resources of two people may present a stronger creditor, which is issued or a credit card. But because two people applied for a loan, which is responsible for the debt. This is true even if the divorce decree issued separate debt obligations to each spouse. Former spouses who run do not pay the bills, and can damage your credit history their ex-partners jointly held accounts.

Account "Users"

If you open an individual account, you can authorize another person to use it. If the name of your spouse as the authorized user, a creditor who reports the credit history to a credit bureau must report the name of your spouse and (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 may not meet their credit, such as students or homemakers. Even if these people can use the account, you - you can not - have an agreement to pay a debt.

If you are divorced;

If you're considering divorce or separation, pay special attention to the status of credit accounts. If you maintain joint accounts during this period, it is important to make regular payments for a credit record will not suffer. As long as the amount due on the joint account, you and your spouse are responsible.

If you divorce, you can 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 can not close a joint account because of a change in marital status, but may make the request of either spouse. The creditor, however, should not change joint accounts to individual accounts. The creditor may require the individual to apply for new credit, and then according to the new application, extend or deny you credit. In the case of a mortgage or home equity loan, the lender can require refinancing to remove the obligation of a spouse.