Joint credit card debt after divorce - who pays credit card bills?
Facts about joint credit card debt after divorce. A divorce decree may declare which spouse pays credit card bills, but divorcing does not relieve either party.
Important things to know about divorce decrees & credit. A divorce decree can endanger credit, and joint debts remain joint debts. Re-assigning debt in divorce decrees does not relieve a spouse of debt responsibility.
Settle joint credit card debt
Getting a divorce and want to remove a spouse or yourself from credit card debt? A divorce decree cannot fully remove a spouse from a credit obligation. One way to solve this problem is to negotiate a debt settlement.
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.
When divorce happens it can affect both partners' credit and finances. Handling joint debts in a divorce can be very stressful when an ex-spouse decides to
ruin your credit. It can be beneficial when partners establish their own accounts instead of having all joint accounts. Joint accounts can't be closed until they are
paid off and all account holders are responsible for the debts. Joint account holders will be affected by any negative or positive information reported on credit
reports.
If you are able to discuss debts decently during a divorce, you could divide the debts, pay them off and then close all joint accounts. Unfortunately many
times one partner wants to ruin the other and will max out joint credit card accounts.
They sometimes like their partner's credit to be ruined and they don't care if
the debts are not paid. The best thing is to strive to close all joint accounts as soon as possible.
Creditors you owe are not bound by the court's decisions and will pursue the names on the account for the debt owed. The court will make a
judgment if partners can't agree about debts. Many times one partner does not know that the other opened joint
accounts. It is wise to order credit reports to check if your name is on any secret accounts without your knowledge.
Monitor your credit reports often during and after a divorce as your partner knows your social security number.
They could try to get credit cards in your name or as a co-signer. Consumers get three free credit reports each year, one from each of the major credit bureaus. Order them and watch for
unfamiliar accounts. Constantly monitor your reports until the divorce is over and you are sure accounts have been closed or separated. It can be a good idea
to do it for a year after a divorce.
Having a credit card is beneficial so being a good
financial manager can have its rewards if you are ever faced with a divorce and
have joint accounts. Keep credit card debt to a minimum, have individual credit card accounts,
limit joint accounts, and pay off debts in a timely manner to try to avoid some financial problems
due to a divorce.
Five Ways Spending Leads To Debt
Getting in debt does not just happen, it is accomplished with bad spending habits. Recognizing specific spending habits may save you money and less stress from being in debt later. To put an end to debts there must be an end to needless spending habits.
Five Habits That Lead To Debt:
1) Spending More Than You Make: Debts have a way of growing when credit cards or loans are used to pay bills or make purchases instead of sticking to a budget and spending only what is earned to pay for purchases each month.
2) Using Credit Cards Instead of Cash: It can be habit forming to whip out a credit card instead of using the money you earned to make purchases. At times we may want to leave money in our wallet but this can be costly later. Using plastic can make us feel like we get something for nothing, yet if you don't want to pay for it today, you probably will not want to pay for it later.
3) Using Cards to Pay Off Cards: You are not paying off debts when you use credit cards to pay off other cards or you secure a loan to pay off other loans. This is just shuffling debts and you may be creating more debt with transaction fees or origination fees.
4) Using Cards for Basic Purchases: Items like gas, groceries, clothes, entertainment, and hobbies are usually considered everyday expenses. It may become habit forming to constantly pay these with credit cards but it is a very bad habit that can quickly lead to more debt. If credit card balances are not paid in full every month, it is not a good idea to keep charging for basic expenses.
5) Using Savings or Borrowing Money: For example, if you make $2,000 per month, don't spend $2,500. It is easy to over spend and then have to withdraw from savings or borrow money. Over time the debt grows, your savings is gone, you owe money on loans, and credit card balances are high. It is too easy to spend more than you make, so get on a budget.
Debt Relief
Debts can cause mounting late fees and high interest rates so the best plan is to get debt relief as soon as possible. By ignoring debts, the amount owed will
increase with added fees. Review all details about your debts, list the loans you owe and other bills. Figure out how much you are in debt and start on a
budget. Figure how much you make, how much you need for basic living expenses, and how much you can pay
toward debts.
When you need more money for debts you must either make more money or save some from your regular income. Anytime you have a few extra dollars, put
it in an account and use it to pay down your debts. Many times consumers refinance their mortgage and get a loan to pay off debts. This can be a
good plan if you don't pay off debts and make new debts. Instead, pay down your mortgage with any extra money until
the mortgage is paid off. Don't ever risk taking out mortgage loans and risk loosing your home if you have any doubts about repaying the money.
Some consumers get debt relief by using money in their IRA (Individual Retirement Accounts) but this can have a negative effect on your future. When you
withdraw from your IRA, you can loose your tax deferred returns. If getting debt relief is beyond your expertise, consider getting a free quote from a debt
relief professional. Let them tell you some debt relief choices that you can consider. The important thing is not to delay and get
deeper in debt.
Five Ways Spending Leads To Debt
Getting in debt does not just happen, it is accomplished with bad spending habits. Recognizing specific spending habits may save you money and less stress from being in debt later. To put an end to debts there must be an end to needless spending habits.
Five Habits That Lead To Debt:
1) Spending More Than You Make: Debts have a way of growing when credit cards or loans are used to pay bills or make purchases instead of sticking to a budget and spending only what is earned to pay for purchases each month.
2) Using Credit Cards Instead of Cash: It can be habit forming to whip out a credit card instead of using the money you earned to make purchases. At times we may want to leave money in our wallet but this can be costly later. Using plastic can make us feel like we get something for nothing, yet if you don't want to pay for it today, you probably will not want to pay for it later.
3) Using Cards to Pay Off Cards: You are not paying off debts when you use credit cards to pay off other cards or you secure a loan to pay off other loans. This is just shuffling debts and you may be creating more debt with transaction fees or origination fees.
4) Using Cards for Basic Purchases: Items like gas, groceries, clothes, entertainment, and hobbies are usually considered everyday expenses. It may become habit forming to constantly pay these with credit cards but it is a very bad habit that can quickly lead to more debt. If credit card balances are not paid in full every month, it is not a good idea to keep charging for basic expenses.
5) Using Savings or Borrowing Money: For example, if you make $2,000 per month, don't spend $2,500. It is easy to over spend and then have to withdraw from savings or borrow money. Over time the debt grows, your savings is gone, you owe money on loans, and credit card balances are high. It is too easy to spend more than you make, so get on a budget.
Compare credit counseling vs debt settlement to help you decide which one offers the best benefits for the short term as well as long term. Whether you choose a credit counseling agency or a debt settlement company, both programs only assist with unsecured debt. Learn the types of unsecured debt and who qualifies for a debt consolidation loan.
Auto Loan: Get free quotes and apply for a new or used auto loan or for auto refinancing.
Credit Card: Search for secured and unsecured credit card applications and apply online. Applications for all types of cards ranging from an instant approval bad credit card to no deposit cards, including platinum credit card rewards.
Credit Report: Free credit report help to fix credit report errors and improve credit score ratings. You are entitled to one free credit report annually.
Free Credit Offers: Get no obligation, free credit offers plus financial tips to help effectively manage your personal finances.
Home Loan: Free multiple quotes from mortgage lenders. Apply for a new home loan and start building your financial security.
Mortgage Refinancing: 2nd mortgage loan and other types of mortgage refinancing for home remodeling, equity cash out or a debt consolidation loan and more.
Payday Loan: Easy approval bad credit unsecured loan with no credit check, no deposit and no security.
Personal Loan: Submit a short or long term personal loan application (if available), or apply for other secured or unsecured loan offers.
Personal Finance: How to file bankruptcy plus free bankruptcy forms. Create a household personal budget, balance a checkbook register, track expenses and more.
Establish or rebuild bad credit:
Although credit options are limited and more restrictive, there are still ways to establish and rebuild bad credit, including:
