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Important Things to Know About Divorce and Credit
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.
You may order a free credit report copy at
www.creditfederal.com/credit-report.html
Article by Toni Phelps of CreditFederal.com. More information
about credit after divorce: joint
mortgage loan, joint auto
loan, and joint credit
cards
MORE RESOURCES:
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