5 tips for protecting your credit during marriage breakup
Dear Opening Credits,
My husband and I have been separated for 11 months. He has two credit cards that are now very delinquent with high balances. They are in his name only. Can the creditors come after me for his debt? -- Separated
I'm sorry to hear about your marriage, but I applaud you for being concerned about your potential liabilities.
There are quite a few "ifs" here based on the information you provided. You say the cards are only in your husband's name. However, in many cases, you still might be responsible for the debts. It might not seem right, but when it comes to marital separation and divorce, things are rarely simple. Messy is more like it.
The best way to begin is to check your credit report -- do it for free once a year at AnnualCreditReport.com -- to see if the cards come up under your name. It can also show if credit card companies with which you don't have accounts show up as creditors.
For example, you could be exposed to potential liability if:
- You live in a community property state, where both spouses are responsible for debts, even if it's only incurred by the husband or the wife alone.
- He forged your signature to the credit application.
- Your husband used the cards to charge purchases for the benefit of your shared lifestyle. That could allow him to argue that you should share the cost because you shared the benefits. "In a divorce action, you may be responsible for some of the debt if the credit cards were used during the marriage for marital items," says Corinne DeStefano, a matrimonial attorney with Dalena, Dalena & DeStefano in Madison, N.J. "These items could include furnishings, vacations, restaurants, clothing, food, etcetera."
DeStefano says the marital portion of the credit card debt can be offset against any marital assets to which you might be entitled.
You don't say if you're in the midst of divorce proceedings or if there's a chance for reconciliation. If you're pursuing divorce, it's essential that you make sure you're protected from the debt -- whether or not your name is on the accounts.
If your name does appear on the accounts, there could be trouble for you even if your divorce settlement states the debt is your husband's responsibility. That's because court orders do not negate the original contracts with your creditors. That means if your name was on the original contract with a lender, a divorce settlement won't take your name out of it. You'll still be bound by the credit card contract -- and responsible -- no matter what the divorce agreement says. That's a surprise for many divorced people who thought that a debt would become the responsibility of an ex-spouse after a divorce.
If that's the case with you, and if your husband files for bankruptcy or just flat-out doesn't pay those bills, the credit card companies will look to you for payment, DeStefano says. You could try to pursue your husband after the fact to get money back, she says, but if he doesn't have assets, you'll be out of luck.
Here are five ways you can start to clean up the mess before it begins:
1. Check your credit reports and make sure you're not listed as a debtor on the delinquent accounts.
2. Double-check your reports to make sure there are no other "shared" accounts that could cause trouble for you in the future if your husband doesn't make payments.
3. If you are on any delinquent accounts, contact the lenders and let them know what's happening. Try to negotiate better terms -- or even a payment plan -- now so the accounts don't go into collection and ruin your credit. If you and your husband are living at different addresses, request the lenders send you a duplicate copy of the bill so you can be sure to know when payments are due. You can pay the minimum now, with the intent of clearing things up during divorce proceedings. Keep in mind that if you do make payments to keep your credit healthy, your husband could argue you've taken responsibility for the debt.
4. If you're planning to make a permanent split with your husband, contact a good divorce attorney or mediator. Consider starting proceedings so you can protect your credit and your assets.
5. Obtain a credit card in your name only. You'll be able to use this account without worrying about your spouse.
Best of luck to you.
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