A divorce is traumatic and expensive enough without getting
into disputes with creditors over account balances. But there's
a simple way to protect your relationship with creditors and
maintain a healthy credit history when going through a divorce,
according to Norm Magnuson of Consumer Data Industry Association,
Inc.
"The first step is to contact all of your credit grantors,
such as credit card companies, retailers and your mortgage company," said
Magnuson. "Let your creditors know that you're in the process
of a divorce, and then check the status of each account. Find
out if your accounts are joint, authorized-user, or individual
accounts. Just remember, you are personally responsible for any
accounts that were opened under your name."
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All joint and authorized-user accounts should be closed and
new accounts opened separately. If a joint account remains open,
you are responsible for the balance on the account despite what
the divorce decree stipulates, even if you don't make a purchase.
When the final divorce is granted, the court decree that assigns
a bill to your spouse only determines rights between you and
your ex-spouse. Legally, on a joint account, you are still obligated
to the creditor for all accounts due regardless of the divorce
decree settlement. Either spouse can be sued for the balance.
Magnuson says that consumers should be especially careful about
an authorized-user account, which permits one spouse to use the
account while the other is responsible for the bill.
"One spouse can run up a large bill without the knowledge
of the other party," said Magnuson. "The person who
opened the account is responsible for the balance even if the
purchase was not authorized."
Check Credit Standing
If joint accounts are not separated immediately, it is possible
that adverse information could appear on your credit report. "It
is essential for the consumer to examine each account carefully
and either close it or change it from joint to individual status.
Each spouse should get a copy of his or her credit report and verify
that the information there is current and correct," notes
Magnuson.
"The consumer can minimize the impact of a divorce on their relationship
with creditors by taking the time to communicate with them and keep them
informed of circumstances that may affect the consumer's ability to fulfill
their financial obligations," said Magnuson.
CDIA is a trade association headquartered in Washington, D.C. with over
1200 credit reporting, collection service and mortgage reporting company
members. Its primary functions are legislative affairs, industry operating
standards, public relations and education.
Article courtesy of:
Consumer Data Industry Association
1090 Vermont Avenue, N.W., Suite 200
Washington, D.C. 20005-4905
www.cdiaonline.com
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