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Mary and Bill recently divorced. Their divorce, that Bill would be that the assets 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 to the divorce, noted that they are not responsible for the accounts. The creditors correctly stated that they are not parties to the decree and that Mary was still legally responsible for the payment from the couple joint accounts. Mary later found out that the late payments appeared on the credit report.
If you have recently been through a divorce or contemplating one, you can closely examine issues related to credit. Understanding of the different types of credit accounts in a marriage can be used to illuminate the potential benefits and risks of each.
There are two types of credit accounts: individual and joint. You can use an authorized person, either with an invoice. If you opt for credit, whether a credit card or a mortgage loan-you'll be asked select a type.
Individual or joint account
Individual Account: Your income, assets, credit history and are considered by the creditor. Whether you are married or single, you alone are responsible for paying the debt. The account will appear on your credit report, and may appear on the credit report of an "authorized" user. However, if you live in a community property 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 the individual claims one spouse may appear on the credit report from the other side.
Pros and Cons: If you're not employed outside the home, work part time or have a low paying job, it can be difficult to build a strong financial picture without your spouse income. But if you have an account in your name and are responsible, no one can negatively affect your credit record.
Joint Account: Your income, financial assets, loans and history and spouse's are considerations for a joint account. Anyway, dealing with household bills, you and your spouse are responsible for ensuring that the debt be paid. A creditor who reports the credit worthiness of a joint account to credit bureaus must be in both names (if the account was opened after June 1, 1977).
Advantages / Disadvantages: An application with the required financial resources of two people may be a stronger case to a creditor who is granting a loan or credit card. But because two people together for the credit, each is responsible for the debt. This applies even if a divorce is separate bonds for each spouse. Former spouses who run up to, and bills to pay, they can not hurt their ex-partners of Credit histories are kept together.
Account "Users"
If you are an individual account, you can authorize another person to use it. If you have a name for the spouse, the user, a creditor who reports the credit history to a Credit Bureau have it in your spouse's name as well as in your (if the account was opened after June 1, 1977) . A creditor also may report the credit history, on behalf of another authorized user.
Advantages / Disadvantages: User accounts are often used for convenience. They benefit people who might not qualify for credit on their own, such as students or housewives. While these people may be the invoice, you-not they-are contractually liable for paying the debt.
If you divorce
If you are considering a divorce or separation, pay special attention to the status of your credit accounts. If you have joint accounts during this time, it is important that regular payments so your credit picture is not suffering. As long as there is 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 an authorized user. Or ask the creditor, those accounts to individual accounts.
The law provides that a creditor can not close a joint account, since a change of marital status, but can do so at the request of either spouse. A creditor who does not have to change joint accounts to individual accounts. The creditor may require that you once again for the credit on an individual basis and based on your new application, extend or deny credit. In the case of a mortgage or home equity loans, loan is likely to require refinancing to a spouse from the obligation.
If you have recently been through a divorce or contemplating one, you can closely examine issues related to credit. Understanding of the different types of credit accounts in a marriage can be used to illuminate the potential benefits and risks of each.
There are two types of credit accounts: individual and joint. You can use an authorized person, either with an invoice. If you opt for credit, whether a credit card or a mortgage loan-you'll be asked select a type.
Individual or joint account
Individual Account: Your income, assets, credit history and are considered by the creditor. Whether you are married or single, you alone are responsible for paying the debt. The account will appear on your credit report, and may appear on the credit report of an "authorized" user. However, if you live in a community property 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 the individual claims one spouse may appear on the credit report from the other side.
Pros and Cons: If you're not employed outside the home, work part time or have a low paying job, it can be difficult to build a strong financial picture without your spouse income. But if you have an account in your name and are responsible, no one can negatively affect your credit record.
Joint Account: Your income, financial assets, loans and history and spouse's are considerations for a joint account. Anyway, dealing with household bills, you and your spouse are responsible for ensuring that the debt be paid. A creditor who reports the credit worthiness of a joint account to credit bureaus must be in both names (if the account was opened after June 1, 1977).
Advantages / Disadvantages: An application with the required financial resources of two people may be a stronger case to a creditor who is granting a loan or credit card. But because two people together for the credit, each is responsible for the debt. This applies even if a divorce is separate bonds for each spouse. Former spouses who run up to, and bills to pay, they can not hurt their ex-partners of Credit histories are kept together.
Account "Users"
If you are an individual account, you can authorize another person to use it. If you have a name for the spouse, the user, a creditor who reports the credit history to a Credit Bureau have it in your spouse's name as well as in your (if the account was opened after June 1, 1977) . A creditor also may report the credit history, on behalf of another authorized user.
Advantages / Disadvantages: User accounts are often used for convenience. They benefit people who might not qualify for credit on their own, such as students or housewives. While these people may be the invoice, you-not they-are contractually liable for paying the debt.
If you divorce
If you are considering a divorce or separation, pay special attention to the status of your credit accounts. If you have joint accounts during this time, it is important that regular payments so your credit picture is not suffering. As long as there is 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 an authorized user. Or ask the creditor, those accounts to individual accounts.
The law provides that a creditor can not close a joint account, since a change of marital status, but can do so at the request of either spouse. A creditor who does not have to change joint accounts to individual accounts. The creditor may require that you once again for the credit on an individual basis and based on your new application, extend or deny credit. In the case of a mortgage or home equity loans, loan is likely to require refinancing to a spouse from the obligation.
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