Married couples need to realize the problems of untangling their joined credit when faced with Divorce.
Creditors of all types will be looking to collect from one or the other spouse regardless of the divorce, and if neither of the couple pays then the creditor will be more than happy to report a negative listing to their credit reports.
Medical Debt is often considered family debt, so even if one spouse was not listed as a responsible party, they can still be billed.
Credit card, installment, mortgage, and auto loans that are joint will be the responsibility of both parties. An example of this is if you both use a credit card you found through Mozo (http://mozo.com.au/credit-cards), then you will both be responsible for the money spent on it. If payments are missed then the creditors are going to rush just as fast as they can to report the derogatory remark to the credit reporting agencies on both spouses.
When couples file for divorce, they usually get a divorce settlement listing what each party is responsible for.
The problem is that the creditors were not represented nor did they agree. They still hold the right to go after both parties if one fails to pay. The injured spouse can obtain a copy of the divorce degree and forward it to the creditors to plead their case, but the creditor does not have to honor this.
If the creditor or collection agency refuses to accept this, then the only remedy is for the injured spouse to pay the debt off their self so that they don’t incur a bad credit rating resulting if they refuse to pay. The injured spouse would then have to sue the ex-spouse who was deemed responsible for the debt. The injured spouse needs to take a copy of the divorce papers to the court house to prove their case. If the injured spouse wins a judgment against the ex-spouse then a judgment is entered on the ex-spouses credit record. Should the ex-spouse pay the debt back, then it is up to the injured spouse to file a release with the court house so that the credit report can be updated that the ex-spouse did in fact pay.
What commonly happens is if the ex-spouse who didn’t pay gets a judgment they run to the court house and file bankruptcy and include the injured spouse so that they can’t seek reimbursement for the debt the creditors and collection agencies are now trying to collect from them.
Couples going through divorce should, when they know they will be getting a divorce, call all of the creditors and negotiate with them to remove one party off of the account, or if they can’t do that ask that the account be closed and separate accounts be opened in their individual names.
This should be doable if there is no current balance on the account, otherwise the lender may inform the couple that the balance has to be paid before they agree to this.
I suggest that if there is a large balance that can’t immediately be paid off, then the spouse responsible for the debt should seek obtaining a new credit card or installment loan to balance transfer their debt off of the joint account.
Just things couples need to know about Divorce and Credit.
