How To Handle Accounts And Creditors During A Divorce

These are some of the steps that you need to take to handle all credit and joint account matters when getting divorced.

Get Familiar With All Accounts

The first step to take, if you already haven’t done so is to familiarize yourself with all the various credit accounts that you have opened together. You should have a clear idea of what accounts are jointly held and what accounts bear your name. Some accounts simply require a signature privilege to make you liable on the debt as far as the creditor is concerned. For all practical purposes you should consider that account to be joint as well.

Usually it is considered the best possible tactic to close all the joint accounts or remove yours name from the accounts that are jointly held. This will take some doing but will also eliminate the ability of the other spouse to further rake up a debt for which you may be liable in the future. Most divorce proceedings, work towards this end, to somehow distribute the assets and eliminate joint responsibility on any debt or credit. The time period from when the decision to get a divorce is made and the actual filing of paperwork is a very important time for credit because it often continues to be accumulated during this time. A spouse that you planning to break up with may continue to use credit to purchase clothes, furniture, automobile etc., may use your primary credit account do so. It is not uncommon for his or her attorney fees to be paid through your credit or a joint credit account as well. This is why proper planning is so essential as it can prevent these unwanted charges and additional debt to create an additional burden for you.

Get A Copy Of Your Credit Report

One of the first and important steps in preparing for divorce is to pull your credit report as soon as you can. If your creditors and the credit reporting agencies have been dealing with your accounts as they’re supposed to, your credit report would indicate all the accounts that are being held under your name and the accounts that are jointly held with your spouse as well. The one account that they will not indicate is when there is an authorized user on your own account. If you do not have a record of this personally or you cannot remember, you should contact each creditor over the phone and preferably through a written letter as well saying that you no longer authorize any other users on your account apart from yourself. Your credit report however, will indicate when you are an authorized user on some other account.

Freeze Existing Joint Credit Card Accounts

One of the steps that is commonly taken is to freeze an existing credit card account. A creditor will normally refuse to close accounts till it has a balance on it. Loans such as personal loans can be frozen as well. Something as serious as a home loan account will probably have to be dealt with through litigation, to decide how to handle future payments and how is the responsibility for the mortgage payments going to be shared or divided. It is common for the house to be sold and the proceeds to be used to pay off the mortgage completely and close the account. The spouse staying back in the house may also take on the mortgage payments. Anyway, the amount that is owned on a home-loan account cannot be increased by the spouse so there is not much danger of additional liability there.

Keep Making Regular Payments On Mortgage

However, regular payment has to be ensured on the mortgage loan account which is jointly held even during the divorce proceedings till the division of the asset is finalized. If your spouse was responsible for making payments on the mortgage home loan, you should do your best to ensure that he/she continues to do so otherwise any late payment will reflect on your credit report and negatively impact your credit score. When an account is frozen, nobody should be able to charge more or increased the debt on it. This is particularly effective for a credit card account that is jointly held. Especially one that you personally are responsible for making payments on. You do not want your spouse to charge extra on it just to be malicious and leave you with additional debt burden. Unfortunately, there is no way to prevent anyone else from attempting to be open or re-activating the existing or previous account. Therefore, it is important to settle matters at the earliest possible and close the joint accounts. You should continue to review your credit file as often as 3 to 6 months after the divorce to make sure no negative data from any previous accounts is being reported.

As a general rule, all debt incurred during the marriage regardless of the reason or who actually benefits is a marital liability.

Dissolve Joint Account Responsibility

It is assumed that both the spouses are equally liable as far as creditors are concerned. One of the important financial aspects that is discussed during a divorce proceeding is how to deal with joint debts. A good plan involves one spouse taking a particular debt and paying it alone. An even better idea would be to pay off the debt using marital assets. At the end the idea is to pay off the jointly held accounts and close it so there is no negative remark on either credit report and is this no possibility of incurring additional debt by the other spouse.

Remember, revolving accounts such as credit cards can continue to be charged by your spouse if you do not close them. Make all efforts to have your spouse removed as a joint account holder if the credit card belongs to you. Remember, once the debt is incurred on the credit card, both the joint accounts are holders are equally responsible to pay it. Nonpayment will impact of the credit ratings of both the people. However, your spouse may not mind a dent on his/her credit rating just to be malicious. It is important to keep in mind that a judgment cannot command or require the credit reporting agencies to erase negative remarks on your credit report. You can ask your attorney to work out an agreement which allows you a larger property settlement in exchange for you taking over certain credit card and loan accounts so you can rely on yourself and not your ex to make future monthly payments on time.

Sell Larger Joint Assets

When dealing with larger assets like your own home and significant debts, it usually becomes necessary to sell the assets and pay off the debt completely in order to be able to close joint account. Many lenders such as mortgage lenders will not be comfortable with having the name of one of the spouses be taken off the mortgage loan payment because it increases the risk of repayment in case you happen to default in the future.

Affix Ownership for Joint Assets

There are also disagreement as to who should own the asset or the home which only leads to the inevitable decision that no one should and the house should be sold and the debt paid off. People are many times emotionally attached to their homes. However, you should bear in mind that your life will have to undergo some changes after such a major event like a divorce. It is better to move on as quickly as possible so that you can be better off financially in the long run. The advice that you would get from your accountants and your attorney will probably be to plan long term and not short-term. Even though you face difficulties in the short-term, you can climb your way to work through it and rebuild your life in the long-term.

Budget For Expenses of Divorce and Aftermath

Financially planning your budget to deal with expenses and burden of debt during and after the divorce is extremely important. This is where your professionals involved with your divorce proceedings such as an attorney and accountant can be of great help. They will be able to give you an idea of the future funds that you have coming to you from the divorce such as alimony, child support etc. They will be also able to give you an idea of the amount of liabilities you would incur as having to pay off existing debt. At no point of time do you want the divorce proceeding to damage your credit worthiness. You should aim to be able to pay off any existing debt in full, on accounts that are jointly held, using the proceeds from the divorce settlement. This includes settling the home loan from the proceeds of the sale of the home. If you are taking the home as a part of your settlement in a divorce proceeding you should ensure that your income permits you to maintain the house and does not leave you financially strained in the future.

Separate Financial Matters

An ideal outcome of a divorce settlement would be to be able to separate all your finances. There should be no joint debt, assets or credit accounts after the divorce. This may be the outcome of the judgment passed by a court as well. However, the law may require the judges to work out things in a certain manner which may not be to your maximum benefit. It is prudent, mature and advisable to just settle your dispute among yourselves and enter into a marital settlement agreement by having a discussion amongst yourselves. Try to be civil and maintain a level head as much as possible to deal with all issues of credit, and make a clear marital settlement agreement so that it makes sense to you and anybody else reading it.

Try To Do A Mutual Agreement and Settlement Out Of Court

A settlement agreement can go into as much detail as you state allows and your attorney can help with drafting it. You can spell out specifics regarding the debt and how you will manage to cover all contingencies. However, it is equally important to understand that your creditors and credit card companies are not party to to any divorce proceeding. They are not held liable or required to legally abide by any judgment passed by the judge. They can decide to recover the money from one spouse first even though the judgment decrees that the other spouse pays it off. Hence, it is once again a good idea to settle these matters amongst yourselves and deal with them as prudently and quickly as possible. It is also a good idea to communicate a marital agreement regarding his debt to the creditor.

As long as you are mentioned on the credit account as joint account holder, the creditor can come after you if your spouse defaults on the payment. As long as two people are joint account holders on the credit account, late payments will continue to affect the credit report of both the people.

Pay Off Debt On Secured Loans and End Debt Liability

When it comes to secured debts such as mortgage and car loans, once more the bottom line should be to be able to pay off the debt and close the account. You may want to divide the debt off cleanly. The option will be to liquidate or refinance the asset so that only one person’s name is associated with the ownership. However, what is best for you may not be always possible to do. For example, you may find yourself in need of financial resources after a divorce before you can meet certain financial obligations. For example, if you cannot sell the house now, you should provide in a written agreement that it will be sold before a certain date or upon a contingency such as when all the living children reach the age of 18. It may not be possible to refinance the home, as a single signatory without your spouse. Many mortgage lenders are un-willing to have a single spouse on a large home loan because it increases the risk of default.

Deal with Credit Issues Even Though It May Seem Trivial

Going through a divorce is a great emotional strain for most of couples. The fact of the matter is that issues like who opened the MasterCard account, who actually uses and pays the bills on a credit card, etc. may not seem like the most important things . There will be many other emotional issues on your mind which concern your life more deeply.

However, the hard fact of truth is that credit issues are something that can come and bite you later on in life. The hard fact is also that even if you were not responsible for the financial planning of your home, you will need to have your debt and credit matters set in order so that you do not end up with additional financial liability. No matter what angst or woes you may have against your spouse, it is usually in the best interest of both to settle the financial matters as best as possible. While the credit is issues may not be a priority during a divorce, you should make them see that they do not get ignored. This is something that can be dealt with in a clinical manner as opposed to the emotional and psychological factors involved in a divorce. So take care of this aspect of a divorce so that you are not burdened unnecessarily any more than you already are. It is one way of ensuring a better and a happier future for yourself.

 

Why Credit Management Is Important When Getting Divorced

If you do happen to face the unfortunate event of getting a divorce, you will need to plan for several things. Whereas, planning and organizing your life up for a divorce may involve several more important things such as your children, the scope of this article is limited to planning and organizing your credit and debt. One of the first things that you need to do when you know that divorce is an eventuality is to get the credit related aspects of your life in order.

There are two professionals that you should contact immediately and directly for advice on planning a divorce, an attorney and certified divorce financial planner. The role of the attorney is obvious as he will help you deal with several legal issues pertaining to the divorce. The role of the certified divorce financial planner is less known and it is a field that is relatively new. However, it is gaining in popularity as it has hurt a lot of people tackle a lot of financial issues more competently during a divorce. A certified divorce planning planner is an accountant or financial planning planner who concentrates on specific financial issues surrounding a divorce. A certified divorce financial planner can help you organize and plan for divorce and post divorce. He can help the spouse who has no prior knowledge of the family’s finances become more aware and help the sophisticated spouse organize and better plan budgets and decide on appropriate division.

For example, the commonest dilemma facing a divorce in person is how to divide up all the tangible and intangible assets and debts. A common divorce situation involves a family with two major sets which are, a home and a retirement account with roughly the same that were linked. While it may seem easy and simple that one person should take the one and the other take the remaining assets, it may not necessarily be the case.

For example, the spouse taking up the home, can he or she afford to keep it up? there is also a difference in the value of the two investment beyond the actual dollar work that needs to be considered. For example, can a similar home be purchased in the area with ease, is a similar housing available anymore or has inflation or other reasons put housing beyond the means available to the person? A certified divorce financial planner is a good source for answering this question as he can help determine what makes the most sense for you.

We will discuss more about handling creditors and credit accounts in the next post.

Why Credit Management Is Important During Marriage

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How To Handle Credit Matters With Your Spouse

It is common for one of the spouse to be more proactive in handling the finances of the family. However, it is advisable that both the spouses be aware of the number and nature of the accounts specially the accounts that are jointly held, and accounts you are co-signed on. If possible share financial responsibility for these accounts as well even when you are not actively involved in the financial planning itself. It is a fact that a divorce can cost you less in time, emotion and the fees if you are more up-to-date on all your family’s debt and credit issues.

Keep Track Of the Accounts

It is important to keep track of how many accounts you own. Which one is our jointly held and which ones you are an authorized user on. Communicate clearly with your spouse in order to know how the credit cards are being used, what kind of revolving debt you have to deal with every month. The usage of Internet banking and Internet access to account statements and payment details has made it easy for a person to keep track on credit cards, checking accounts and savings accounts. All it takes is sitting down for an hour or so once every month and have a look at the usage of all your accounts, specially the ones on which you are joint account holder.

Be Communicative About Finances

Encourage your spouse to be communicative about any credit issue.

When a spouse is being uncommunicative it could be a pointer towards some financial trouble. It could be an additional burden on revolving accounts such as credit card, slow payment history or missed payments on important debt accounts. The silence or secretiveness about financial matters does not necessarily mean that your spouse is doing something wrong behind your back. It could just be a spot of financial trouble, being involved in some financial setbacks such as loss of job etc. which could be embarrassing for him or her to discuss. Understand that like everything else in a marriage, credit and debt management also requires clear and constant communication.

Be Considerate and Thoughtful

One of the largest reasons for divorce between a couple is financial trouble and discontent. Even in the best of circumstances, broaching financial topics and opening a discussion can be tricky. If credit-rating is a concern between how the financial situation is being tackled between you and your spouse, you do not want to make matters worse by acting thoughtlessly. While protecting your credit is possible and should be done, you should also exercise caution, thoughtfulness and consideration when discussing these matters with your spouse. You do not want to bring about any further emotional stress or trouble because of handling financial issues improperly.

Why Credit Management Is Important Before Marriage

Credit Issues To Discuss Before Getting Married

Even though it may seem unromantic, sensible and reasonable people may want to sit down and discuss each individual financial situation before getting married. A lot of your future happiness is going to depend upon the state of your finances. The credit rating of each spouse is an important contribution factor to the financial health of the family. It is a good idea to review your credit report, your credit scores and your credit usage habits. Lots of things changed when people get married. This may include the usage of credit and future burden on financial instruments such as credit cards and requirement of loans.

Maintain Your Single Credit Accounts as Such

It is advisable that if you had individual credit accounts such as credit cards before you got married, you should maintain them as such. Do not cancel them and do not add your spouse’s name to them. Instead of adding your spouse as joint account holder, you can always add them as an authorized user or a nominee. This way if God forbid, something should happen to you in the future, you spouse will have access to your hard-earned and saved financial resources. Adding them as a joint account holder to your existing credit account means that they now share the account equally with you and have the power to build or break those accounts.

If you have been working hard to maintaining these accounts, keeping them current and making timely payments, you will not want an untimely divorce or losing a spouse to cause unexpected changes and loss of a credit-rating. Jointly held accounts are complicated to deal with in a divorce proceeding. There is often a change in a personal life such as having to obtain a new job, a new home or insurance soon after the divorce. For all these things, a healthy credit rating is essential. If you are the one who makes the payments on a credit account, it is a good idea to keep them under your name and let your spouse maintain his or her individual credit account..

You should not close the single credit accounts in order to open new joint once because the odds are that your single credit accounts already have a credit history. The length and the depth of the payment history that you have on any credit account is an important factor that is considered for calculation of your credit score. Opening new accounts will mean that those accounts have a short-term history which will reduce your credit score. The older the credit accounts are with a long payment history the more chances you have of raising your credit score.

Manage Joint Accounts

By opening a joint account or making a current existing account into a joint account with your spouse means that you both share responsibility as if the account was opened using both of your Social Security number. Although you may be able to remove the name from your account in the future, it may be difficult depending upon the nature of the account and your circumstances. For example, a jointly held account may come under litigation in case of a divorce.

A personal loan that has both yours and your spouse’s name on it may make the lender unwilling to remove the name of the spouse because that increases the risk of recovery of the loan in case you happen to default.

Discuss Credit Usage In The Future

Another important thing to consider and discuss with your spouse is how you are going to use the credit jointly together in the future. For example, you may have conservative credit card using habits but your spouse may rely on making a lot of expense on the revolving accounts. Your spouse may be in the habit of carrying large balances on the credit card even though he or she pays the balances for a month. You should remember that the having a high balance on a credit card negatively impacts your credit score. Once you get married, you are going to have to plan for a lot of changes and additional financial burdens. The uses of credit has to be planned and organized accordingly.

For example, you may not want to use credit cards extensively and curb on your spending if you want to save for a home loan. Take a good look at the credit rating of your spouse and see how you both can maintain current good rating on how to fix a bad one. You may want to postpone opening joint account together till the time that the credit rating of your spouse can be adequately repaired. If there are any particular credit habits such as carrying high balances on the credit card that needs to be addressed, do so before having joint credit cards with your spouse. As mentioned before, the activity on a joint credit card account will impact the credit rating of both. It will be reported on the credit report of both the people and therefore any joint credit account should be used prudently and wisely in order to prevent a negative impact on anyone’s credit score.

Drafting a Prenuptial Agreement

Another thing to consider is the importance of credit issues when drafting a prenuptial agreement. A prenuptial agreement is becoming more and more common with people as a part of making arrangements to get married. Unless of course you are one of the people who think that is a it is unromantic. When people think of a prenuptial agreement they think in terms of setting down terms and conditions for preservation of assets and limitation of alimony. However, credit rating is just as valuable an asset as anything else. A credit rating today determines your credit worthiness and how available things like credit cards, home loan, automobile loan, student loan, utility service and even jobs are for you. Therefore one of the principal issues to be discussed in a premarital planning or a prenuptial agreement should be to spell out how you will handle debt and credit during and at the conclusion of marriage.

If you do not intend to have a prenuptial agreement for your marriage, you should at least plan the use of credit in a manner that will allow you to preserve it as an asset of your own. The credit rating of a person does not get distributed in a divorce. It is yours now and forever. So it is your job to protect it as much as possible. You do not want it getting damaged at the hands of a neglectful or malicious spouse after divorce.

Taking Advantage of Spouse’s Better Credit Rating

The flipside of this situation can equally be true. Your spouse can have a better credit score than you and you can take advantage of it by opening joint accounts. In any case, you should keep an eye out and monitor any accounts that have held jointly so as to ensure that they stay healthy. Once an account is jointly held you cannot legally restrict anyone partly from using it or requiring one party to become solely responsible for it. This can only be managed through a legal judgment.

Marriage, Divorce and Credit – Why You Should Be Prepared

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Your credit rating is strictly based on statistical and numerological information about your finances pertaining to credit usage. It may seem strange to discuss marriage and divorce in connection with your credit rating.

Since your personal circumstances such as your relationship, your race and religion are not the things that are supposed to impact your credit rating, how can a marriage or divorce be of any consequence as well? You’ll find many articles on the Internet saying that the possibility of a marriage or divorce affecting your credit score is remote.

However, to the contrary, a marriage or a divorce brings about a big change in the personal life of a person which more often than not permeates to the financial aspect of things as well. Given the fact that divorce is a very likely phenomena and marriage even more so, the effect of these two life-changing events cannot be ignored as far as your credit rating is concerned. It would be prudent to plan for both these eventualities as far as your credit rating is concerned.

Your credit rating is yours alone now and forever. It is one of your strongest assets when it comes to getting loans, taking a house on rent or even getting a job. You should plan for it and protect it as a valuable asset that it is. Your credit rating is what makes credit and its usage possible for you. We all know that without the use of credit, several wonderful things in life such as owning a home, an automobile or just the convenience of using credit cards will not be possible.

The truth is that many people discover the importance of credit rating a bit too late in life. It comes as a rude awakening when they suddenly realize that they are having problems getting approved for a loan. A simple error of having missed a credit card payment 6 months back is impacting the credit score negatively. The fact is that when you are married, there is more room for such mistakes and errors when you have joint accounts or your spouse is using your credit card. Just by charging more than you normally do and carrying more balance on the card you can damage your credit rating.

Even if you think it is not required to discuss these things beforehand with your would be spouse, you yourself should be aware of them so that you know how to handle them when the issue does arise.

At the same time, you also need an understanding of how a divorce can impact your credit worthiness, and believe us when we tell you that it can. It is a part of your financial situation that gets impacted during and after a divorce. A mis-managed joint account can have long term repercussions and result in negative entries on your credit report that stay for years to come. In fact, it is ridiculously easy for something like this to happen to your credit history during a divorce. There are ways to circumvent and avoid un-necessary exposure to such events.

Therefore, in this section we will talk about how like everything else you plan for when getting married, your credit rating should be one of the things that you discuss and plan for.

Does Your Spouse's Information Appear on Your Credit Report?

Every consumer in the United States of America has his own credit report. The credit report uses very saddened by such as name and address and social security number to make sure that every information connected to the individual is reported to the credit bureau. Getting married is not going to have an effect on your credit report. Your spouse’s credit history is not going to affect yours and not is the information present on your spouse’s credit file going to find its way on your credit file. However if you open any accounts that jointly after marriage can both these accounts will be reported on the credit file of both husband and wife. This is regardless to who uses the account and who pays the bill. Similarly if the spouse adds another as an authorized user on an account on this account will be reported on the credit file of both the people. The same holds true when one spouse co-signed for a credit application for the other.

Credit myths related to Marriage

There are some common myths that are related to marriage. These myths make people unsure of what is going to happen to their credit reports and scores when they get married. Here are some of the common marriage myths related to credit.

Our credit files will be merged

Credit reports and credit scores continue to be individual and independent even after marriage. Credit files are connected to each individual through their social security numbers. Getting married is not going to join your credit reports.

Marriage will lower credit score

Even if you are marrying someone with a lower credit rating then yours, your credit score will not get affected. Expenses from the wedding and honeymoon done on credit may affect your credit rating but not the wedding itself.

Credit History is erased with Change in the Last Name

This is also one of the common myths. Any change in name, address when reported to the credit bureau by a lender is added to the existing information. A credit report uses several identifiers to connect a credit history to an individual. Name is just one of them. The social security number is an important identifier used. A change in the last name will be recorded in your credit report along with your maiden name. No change in the transaction history will occur. You will continue to have the same credit report.

My Spouse’s poor credit Will Hurt My Score

This is not true. Your individual scores will remain the same. You may feel the effect of a spouse’s poor credit score when you apply a loan jointly. Due to the poor credit score of your spouse, you may get denied the loan or get higher interest rates on credit cards and mortgages.

You automatically become the Join account Holder on the Spouse’s Accounts

Marriage will not make you a joint account holder on your spouse’s accounts. In order to make the accounts joint you will have to file the necessary paper work with the bank or the creditor and your spouse will have to add you as a joint account holder.

A Collection Agency May Collect An Ex-Spouse’s Debt

The right of a collection agency to collect a debt from an individual is only limited by the statue of limitation.  The statue of limitation states as to how long after the delinquency date can they still go after the debtor to recover the money.  Sometimes people get surprised when an ex-spouses debt comes up in the form of a collection of account several years later.  The reason for this mostly is the misunderstanding of a divorce decree.  Sometimes people misunderstand that is a divorce decree handed the responsibility for a particular loan or a credit account to the other spouse, they themselves have been absolved of all responsibility.
Unfortunately this is not the case.  It is the lender that has the power to make the absolute decision whether or not to remove you from a joint account held by you and your ex-spouse.  After the divorce decree you have to try and get your name removed from the original contract by speaking about it with the lender.  If the lender agrees to let a single person take responsibility for it then you can have your name taken of the account and will no longer be held liable for any future delinquency.  However, if you have not taken the step of negotiating with the lender after the divorce decree that it is quite possible that your name is still exist on the account.
Every state as a different policy as to what the time limit is for the statue of limitation.  The statue of limitation for the recovery of a debt by a collection agency may extend up to more than seven years.  If there was a delinquent account during or before divorce, even though delinquent account may have vanished from your credit report after seven years a collection agency may still come and try to recover the debt from you.

If you had not negotiated with the lender to have your name removed from the concern the account as per the divorce decree then any future late payment or delinquency by your ex-spouse can also result in the creditor or a collection agency coming after you for repayment.

For this reason it is increasingly important that you make a careful note of all the accounts that are jointly held by you and your ex-spouse during before the proceedings of the divorce and have them taking care of. The best thing would be to close all the joint accounts or have them changed to a single name status before the divorce.

What Is a Divorce Decree?

A divorce decree is an agreement between you, your spouse and the court as to who will take responsibility for a debt or an account.  One of the most common  misunderstanding is that this leads to is that people presume that they have been forgone the responsibility for the loan and it will be taken of their credit report.  However, this is not the case.  Whether or not you can be absolved of the responsibility of the loan altogether depends on the lender.  You will need to change the contract that you had put the lender and have him agreed to remove you from the account.

Till the time that this happens the joint account will continue to be reported to both your credit histories and both of you will be responsible for making payments on it.  Any late payment or delinquency that actors will impact both the credit reports and damage the credit rating of both the people.  Only the lender can agree to alter the original contract so that you are no longer responsible for the debt.  Something like this can come back to haunt you even years after the divorce.  If you do not have the account report from a credit report by negotiating with the lender then any late payments that might occur years down the line may still affect your credit report.  Worse, if the account is passed on to a collections agency in the future the collection agency might decide to come after you.

Apart from negotiating with the lender to have your name removed from it you can work together with the ex-spouse in order to pay it off and close it, if such a measure is possible.  Doing this will not remove the account immediately from your credit report but will eliminate the risk of the account influencing your credit score negatively in the future.

A Divorce Does Not Directly Impact Your Credit Score

While it is true that the divorce doesn’t directly impact the credit rating of the couple involved in most of the circumstances it does lead to complications.  A divorce leads to concerns and disagreements on the financial matters.  Any joint accounts that get embroiled in the divorce process are likely to suffer which will in turn affect your credit history and your credit rating.  Every account that is jointly held is recorded individually in the credit history of both the people.  Which means that either of you is liable and responsible to make pavement on the account.  Going through a divorce does not change this.  But unfortunately owing to the animosity that the two people might feel towards each other payments may be deliberately or accidentally missed.  If this happens then the credit history of both the individuals will suffer.  It would be ideal if two people could sit down and have a clear and calm discussion as to how to continue making payments on the joint accounts during the proceedings of the divorce.  It would also be a good idea to close the joint account or to have the name of the secondary account holder removed from the account before the divorce.

Many people get confused by what a divorce decree stands for.  A divorce decree is an understanding between you and your spouse and the court as to who is responsible for the accounts opened during marriage.  This however doesn’t change the contract that you have with the lender.  If the spouse responsible for the account under the divorce decree is unwilling to take the responsibility for the account then you can still be held liable to make the payment if the contract has not been changed by the lender.  The late payment and the subsequent possible delinquency of the account will be reported on the credit report of both the spouses and will have a negative impact on the credit rating of both the individuals.

Once a missed payment or a delinquent account is reported it stays on a credit report for a period of seven years from the date that it was first reported.  Worse still it can go into collections which can come back to haunt you years after the debt was undertaken and even belong after it has disappeared from your credit report.

It is a sad but true facts that a windy tape and angry spouse may try to hurt their ex-wife or husband by overextending the purchases on joint credit account with the intent of straddling the other person by a huge amount of debt and trying to wreck their credit rating.  What such a person does not understand is that as long as the account is a joint account which is what it will need to be in order for the person to charge it, any unpaid amount will wreck the credit rating of both the people.  But in many circumstances are calculating person also may know that the ex-spouse that they are trying to target will make the payments since he or she will not want to ruin his or her credit history.

The best way to manage financial issues is to try and keep a civil relationship during the divorce and avoid the pitfalls of a vindictive and nasty divorce.  Try and close or convert to a single status as many accounts as possible before the divorce.