|
| Divorce/Separation & Your Credit |
If you are about to got through a divorce or separation, you need to be concerned about your credit rating.
Too many individuals do not take steps necessary to protect their credit rating. Granted this is a very
difficult time in one's life, but some effort needs to be made to ensure your financial future. It is
important that you understand how accounts were established before and during the course of your relationship.
Separation Agreements & Account Agreements:
Too many people assume that just because there is a separation agreement in place, they are not responsible
for re-paying the account. What you must realize is that a separation agreement does not overrule the account
agreement. For example, you have a credit card in your name which your spouse was an authorized user.
You have a separation agreement where your spouse has accepted to pay 50% of the balance. If your spouse does
not pay this amount, you are still responsible to pay the balance as you hold the account.
A separation agreement exists only between you and your spouse. Creditors are not concerned what is
contained in a separation agreement.
If your name is on an account, you need to make sure that the payments are being made.
If payments are not being made and your name is on the account, your credit report will be affected.
In the case of a joint account where the separation agreement dictates the other party is to pay the account,
but does not, we urge you to keep paying the account, but keep accurate records of all payments that you make.
You can always consult with an attorney to see about getting the money back from the party who, according to
the separation agreement, was to pay the account.
Individual Accounts:
These are accounts where only one person's name is on the account. A second name can be added to the account
as an authorized user, but the primary holder is responsible for the account.
Joint Accounts:
These accounts have both names on the account and are considered joint and severally liable. This means
that either person can be held legally responsible for 100% of the debt. If a separation agreement indicates
that person A is supposed to pay the account, but does not, the creditor can sue BOTH people regardless of the
separation agreement.
Mortgages:
Mortgages are more difficult to split up. The original mortgage was approved based on both of your finances.
In order to remove someone from the mortgage, the remaining person will have to be able to qualify for the
mortgage by him self. In case he cannot qualify alone, someone else must take the place of the person who
is being removed from the mortgage. In a situation where there is a mortgage involved, you will want to
consult with an attorney.
We also suggest the following steps:
- Request a copy of your credit report
- If both people are using an account, make sure both names are on the account
- Close all joint accounts to prevent further charges
- Destroy any remaining checks on joint bank accounts
- Any agreements to pay accounts to be in writing
|
|
|
