Credit Repair Services and Information
Credit and Divorce
When couples divorce, a number of factors can impact
both parties credit. The type of credit accounts and bank accounts is very important
when settling a divorce. Regardless of the status of the divorce, outstanding
balances must be managed and debt repayments are still essential. Any outstanding
balances on both joint and individual accounts must be repaid as agreed
to under the borrowing terms. If payments on a joint account are not made as
arranged, negative information can be applied on the credit history of both parties.
Credit and debt professional can help you
maintain or regain your good credit status after and throughout divorce proceedings.
For those without a history of credit, divorce can be especially challenging.
Every individual entering into divorce proceedings
should request free copies of their credit reports. In addition, free credit
evaluations are available online to help couples and individuals understand
where their credit report is at and potential complications that may be encountered.
Joint accounts can be converted into individual accounts
during divorce. A joint account cannot be closed simply due to changes in
marital status, but only on the request of one of the individuals. The individuals
will not necessarily be eligible for the same credit status they enjoyed
while being married, and a creditor may require a new application for credit based
on an individual. Mortgages and home equity loans usually require refinancing
in order to remove one party from the agreement.
Credit accounts fall into two categories; individual and joint. Either type
of credit account can include an 'authorized user' who is permitted to use the
account. Authorized users of an account can have the credit history of that account
reflected on their credit history. However, credit users are not liable for
payment of that account. Only the person(s) whose name(s) are on the account
are deemed liable for repayment of the account.
Individual Accounts
The ability to open an individual account rests
on that person's credit history, income, assets, etc. and only that individual
is responsible for payment of the account. This account can include 'authorized
users' who are not liable for outstanding balances. If the authorized user
is a spouse, any credit information reported will be reported on the spouse's
report as well. In many states however, debts incurred on individual accounts over
the duration of a marriage can become both spouse's responsibility and a credit
report on an individual account can be reflected on a spouse's credit report.
Joint Accounts
Both spouse's financial information, including
assets, credit history and income are considered when opening joint accounts.
Both spouse's are responsible for debt repayment and the credit reports of each
spouse will reflect the joint account. Joint accounts are often useful for those
individuals who are unable to secure credit based on their own financial history
or situation. Having said that, after divorce, regardless of the divorce
agreement and individual obligations, both parties remain liable for repayment
of the debt. Negative information about joint accounts can be included on both
spouse's credit reports.
Divorce and credit counseling
often go hand in hand. For those individuals who have no history of credit,
divorce can be very financially challenging. Learn what your credit score is
today so that you can better handle the myriad of issues relating to credit and
divorce and your future financial health.
Submit
a free credit evaluation form online or talk to a credit and debt advisor before
your divorce is finalized. If an individual anticipates credit trouble during
the divorce process, accessing professional credit repair services early is
essential.
DivorceMag is a website dedicated
to the topic of divorce and includes a section on money matters, including credit
and divorce. The Legal Information Institute offers in depth information
about divorce.
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