Divorce and Credit Card Debt don’t mix!
Where would the tabloids be without Celebrity divorces? The drama, the excitement, the downright cattyness – most of us simply can’t resist the spectacle.
Indeed, as I write this post, the media is abuzz with news of Heather Mills and Paul McCartney’s messy divorce. Apparently Ms. Mills was awarded far less than she had initially sought, but the two years she spent married to McCartney (who has a net worth of over one billion dollars) will still end up costing him an arm and a leg (sorry Heather).
Till debt do us part…
Of course, as any divorcee will tell you, divorce is anything but glamorous. Indeed, ‘excruciating’ would probably be a more fitting adjective. For most of us, divorce is not about fighting over who owns what, but rather who owes what!
If you think divorce might be on the cards (no pun intended) for you or someone you know, be sure to take the following into consideration:
All joint credit cards will continue to be a joint responsibility until either the debt is paid off or until the lender agrees otherwise. Even if your ex spouse is ordered to take responsibility for a joint credit card, if they miss payments then your credit score can be affected! What’s even worse is that if they don’t pull their weight then the credit card company can often legally chase you to pay.
The first thing you’ll want to do is get a hold of your credit report from each of the three main credit-reporting agencies. You need to know the full extent of any debts that will need to be divided. It’s unfortunate, but many people have been surprised to discover debts run up by their ex-spouse without their knowledge – don’t be one of them.
Depending on what you find, you may also want to consider freezing your joint accounts. This means letting the credit card companies know that there is a divorce in progress, and that you want to temporarily stop any new purchases being made. Note, however, that you must still continue to make minimum payments until the divorce is settled and the debt divided up.
By the way, if your soon to be ex is an authorised user on any of your credit cards, you’ll want to seriously consider getting them removed. Any debt an AU runs up on your credit card is your responsibility alone.
Getting down to the nitty-gritty
In the divorce settlement it’s advisable that you pay off all joint credit card debts if you have the means and can come to an amicable agreement. Unfortunately, responsibility for debts once a marriage has ended is one of the Law’s grey areas.
In other words: Even if your settlement states that your ex is responsible for paying off the card, your creditors aren’t necessarily obligated to officially absolve you of the debt. If your ex isn’t their end of the bargain, don’t be surprised if you start receiving increasingly irate letters and calls from their collections department.
If you do still have credit cards in joint names after the divorce then you need to make sure that statements are sent to both of you. Remember that missing a payment will generally hurt two of you equally, so if your ex is going to have trouble meeting their financial commitments then you need to know about it sooner rather than later!
Try to keep it civil…
Don’t go freezing your accounts or removing your spouse as an authorized user without telling them first. Whilst it may be a pleasant thought to think of your soon-to-be-ex in a store, morbidly embarrassed at their card being refused, it’s probably not going to help matters much in the long run!
Make sure they understand that you’re not trying to be spiteful or petty, but that until you’ve figured out who owes what, it’s probably best to stop making any new purchases on credit.
Final thoughts
Divorce is never a pleasant experience, but failing to adequately address financial concerns through your divorce could wind up costing you thousands of dollars and decimating your FICO score, making it nearly impossible for you to get a loan in the future. Ignoring these matters could turn an unpleasant but relatively short experience into an insufferably long and painful nightmare!
Related posts:
- 8 Tips: Handling Credit Card Debt During a Divorce
- Credit Card Debt After Death
- Marriage and Credit card debt don’t Mix…
- Mega Guide: How to Get Out (and stay out) of Credit Card Debt
- Shedding Debt vs. the Credit Score
hi- i’m separated at this time- not legally– my soon to be ex- has credit cards in his name only– and i have mine in my name–
he has 40,0000 degt– mine— 13,000
he claims we both are legally responsible to split this debt— is this true? thanks jill