Page 13 - Book7E

Credit and Divorce
Divorce can be a very emotional and devastating time and worrying about credit may be the last thing that comes to mind, but it is impor- tant that the right steps are taken for the sake of both parties. The Federal Trade Commission offers the following example and advice about dealing with credit as the result of a divorce.
Mary and Bill recently divorced. Their divorce decree stated that Bill would pay the balances 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 them to the divorce decree, insisting that she was not responsible for the accounts. The creditors correctly stated that they were not parties to the decree and that Mary was still legally responsible for paying off the couple's joint accounts. Mary later found out that the late payments
appeared on her credit report.
If you're considering divorce or separa-
tion, pay special attention to the status of
your credit accounts. If you maintain joint
accounts during this time, it's important
to make regular payments so your credit
record won't suffer. As long as there's 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 was an authorized user or ask the creditor to convert these accounts to individual accounts.
By law, a creditor cannot close a joint account because of a change in marital status, but can do so at the request of either spouse. A creditor, however, does not have to change joint accounts to individual accounts. The creditor can require you to reapply for credit on an indi- vidual basis and then, based on your new application, extend or deny you credit. In the case of a mortgage or home equity loan, a lender is likely to require refinancing to remove a spouse from the obligation.
Reading Your Credit Report 5
People cannot live by lending money to one another.
—John Ruskin