In the credit world, there are two different types of accounts; namely, individual and joint.
Individual accounts are accounts in which one party is solely responsible, regardless of marital status.
It also appears on the credit report of the responsible individual.
If you live in a community property state, such as Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin, both partners may be responsible for the debt, and the debt may appear on both partners' credit reports.
Individual accounts can be advantageous because your spouse's debt need not be considered on loan applications, such as a mortgage.
This is especially advantageous when one spouse makes enough money to qualify for a loan.
The other spouse's obligations normally will not count against your debt ratio.
However, the converse can be disadvantageous if you're the spouse without the money.
You will need your spouse's income to be considered for an application.
Along with the income will be your spouse's own obligations, and if he or she has delinquent accounts, it will also be considered.
Joint accounts are accounts where more than one party is responsible for its repayment.
Joint accounts don't necessarily have to be between spouses.
It can be between other family members, business associates, or any two parties who co-sign a credit application.
Regardless, joint accounts can be advantageous in that both spouses' incomes will jointly be considered for a loan application.
How are these accounts affected when you go through a divorce? When you have a joint debt, divorce does not wipe it out.
The first thing to keep in mind is that joint debts stay joint debts.
When you took out a joint account with your ex-spouse, both of you signed a legally binding contract with your creditors.
The divorce decree does not nullify that contract, nor amends it.
For a contract to be amended, it requires a signed agreement among all parties involved, including both spouses and the creditor.
Unfortunately, creditors do not take part in divorce courts, so the original contract stays in effect.
Normally, a divorce decree will spell out which spouse gets which debt.
In a joint account situation, however, the debt will show up on both credit reports, just like you were married.
Regardless of how your obligations are divided, the payment history remains on both reports.
Therefore, if your ex-spouse is delinquent on his or her account, it will show as delinquent on your account, and will hurt your credit.
Divorce can take a tremendous financial toll on both parties.
Sometimes, the financial hit is so devastating that one of the parties files for bankruptcy.
When this happens, the spouse that didn't file for bankruptcy is unaware of the filing.
It can be months, even years, before they've caught wind of the situation, often too late for any sort of corrective action to take place.
The non-filing spouse can be sued by the creditor legally for repayment of the debt.
The non-filing spouse will also have a bankruptcy on his or her record.
Unfairly so, but legally correct.
Individual accounts, on the other hand, will not usually factor in to a divorce, as the originating spouse is still responsible for the debt.
If you are considering divorce, you should also consider the ramifications of your credit and accounts.
Pay attention to what your financial situation might be after the divorce is finalized.
You may wish to consider closing a joint account and re-opening credit in your own name.
If your accounts are not joint accounts, but your spouse is listed as an authorized user, remove him or her from the account.
The opposite also applies - if you are an authorized user on your spouse's account, have yourself removed as such.
If you have a mortgage, you might wish to refinance into one person's name.
Joint mortgages can be especially hurtful to your credit if you're not the one paying it.
If you're headed for divorce, make sure your own credit report is in order.
Keep an eye on your scores, as it may drop after the divorce is final.
By doing so, you minimize any potential damage to your future finances and can bounce back quickly once your life gets back to normal.
Individual accounts are accounts in which one party is solely responsible, regardless of marital status.
It also appears on the credit report of the responsible individual.
If you live in a community property state, such as Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin, both partners may be responsible for the debt, and the debt may appear on both partners' credit reports.
Individual accounts can be advantageous because your spouse's debt need not be considered on loan applications, such as a mortgage.
This is especially advantageous when one spouse makes enough money to qualify for a loan.
The other spouse's obligations normally will not count against your debt ratio.
However, the converse can be disadvantageous if you're the spouse without the money.
You will need your spouse's income to be considered for an application.
Along with the income will be your spouse's own obligations, and if he or she has delinquent accounts, it will also be considered.
Joint accounts are accounts where more than one party is responsible for its repayment.
Joint accounts don't necessarily have to be between spouses.
It can be between other family members, business associates, or any two parties who co-sign a credit application.
Regardless, joint accounts can be advantageous in that both spouses' incomes will jointly be considered for a loan application.
How are these accounts affected when you go through a divorce? When you have a joint debt, divorce does not wipe it out.
The first thing to keep in mind is that joint debts stay joint debts.
When you took out a joint account with your ex-spouse, both of you signed a legally binding contract with your creditors.
The divorce decree does not nullify that contract, nor amends it.
For a contract to be amended, it requires a signed agreement among all parties involved, including both spouses and the creditor.
Unfortunately, creditors do not take part in divorce courts, so the original contract stays in effect.
Normally, a divorce decree will spell out which spouse gets which debt.
In a joint account situation, however, the debt will show up on both credit reports, just like you were married.
Regardless of how your obligations are divided, the payment history remains on both reports.
Therefore, if your ex-spouse is delinquent on his or her account, it will show as delinquent on your account, and will hurt your credit.
Divorce can take a tremendous financial toll on both parties.
Sometimes, the financial hit is so devastating that one of the parties files for bankruptcy.
When this happens, the spouse that didn't file for bankruptcy is unaware of the filing.
It can be months, even years, before they've caught wind of the situation, often too late for any sort of corrective action to take place.
The non-filing spouse can be sued by the creditor legally for repayment of the debt.
The non-filing spouse will also have a bankruptcy on his or her record.
Unfairly so, but legally correct.
Individual accounts, on the other hand, will not usually factor in to a divorce, as the originating spouse is still responsible for the debt.
If you are considering divorce, you should also consider the ramifications of your credit and accounts.
Pay attention to what your financial situation might be after the divorce is finalized.
You may wish to consider closing a joint account and re-opening credit in your own name.
If your accounts are not joint accounts, but your spouse is listed as an authorized user, remove him or her from the account.
The opposite also applies - if you are an authorized user on your spouse's account, have yourself removed as such.
If you have a mortgage, you might wish to refinance into one person's name.
Joint mortgages can be especially hurtful to your credit if you're not the one paying it.
If you're headed for divorce, make sure your own credit report is in order.
Keep an eye on your scores, as it may drop after the divorce is final.
By doing so, you minimize any potential damage to your future finances and can bounce back quickly once your life gets back to normal.
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