Joseph
Kenny
If you’ve recently divorced or are going
through a divorce, one of the important issues that you should
settle is how any joint debts are to be handled. This includes
mortgages on a jointly owned home and any joint credit cards that
you have. You also need to be aware of how failure to pay those
debts on time will affect your credit rating – even if your
divorce decree states that you are not the party responsible.
There are two kinds of credit card accounts –
individual and joint – and each is seen differently in terms
of credit history. Don’t assume that just because you have
a credit card with your name on it the account was a joint account.
The account holder of an individual account may designate ‘authorized
users’ and issue cards in their name, but the account holder
is still the responsible party for the payment of the bill.
If you authorize a user on an individual account,
the account may show up on both your credit report and theirs.
If you have a joint account, it will appear on both of your credit
reports. If you divorce, you are both responsible for any bills
on joint accounts – but you may also be responsible for
any bills on individual accounts held by your ex-spouse if you
live in a community property state.
Credit companies are obligated to close or freeze
a joint credit account at the request of either holder on the
account, but they may not close the account without that request.
To protect yourself in case of divorce, financial advisors recommend
the following:
Freeze all joint credit accounts immediately.
This will prevent the credit cards from being
run up further and hurting your credit further. Most creditors
will not close an account with an outstanding balance, but will
freeze it at your request.
Remove your ex-spouse as an authorized user from
any individual account that you hold.
It’s important that only you will have the
authorization to charge items on your individual accounts. This
will help protect your accounts, and will ensure that you have
your own credit after the divorce.
Ask credit card companies to convert joint accounts
to individual accounts in the name of the person who will be responsible
for paying them.
The credit card company is not obligated to do
this. They may require that the balance be paid in full, or that
the individual apply for credit in his or her own name, and then
transfer the balance.
Allocate the debts for repayment responsibility.
The best way to allocate debts is for each of
you to agree to be responsible for repayment in full of specific
accounts. Be aware that any agreement between the two of you is
not binding on a third party – the credit card company.
If your ex-spouse agrees to pay an account and then defaults,
it is still legally your responsibility to the credit card company
to pay it. You ARE entitled by law to sue your ex-spouse for that
money – but few ex-spouses do.
Joe Kenny writes for Credit Card Guide, offering the latest information
on credit cards in the UK, visit them today us to apply for a
0% balance transfers and start clearing credit card debt today.
Visit today: www.cardguide.co.uk/
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