Effect of filing for divorce on CC accounts and forclosure?

[Anonymous]

What if any effect does filing for divorce have on CC accounts?  Can the terms be modified?  What of a foreclosure and being filed for a divorce?

[GFer]

Depends on your loan agreement and state laws (more so with the state laws).

In my state, in order to protect myself, I actually had to close my accounts or they would continue as joint accounts.

[Miner]

Do yourself a favor and open an CC in your own name and then close the old joint accounts.  If there is a balance due, include it's payoff in the divorce settlement.  There is no effect by the divorce itself, only the effect of the accounts being closed or often the case, being ignored and lates piling up.  You want to remove yourself from any shared credit responsibility with your spouse.  Talk to your creditors and see what they can do.

Message Edited by Miner on 09-30-2008 09:29 PM

[fishbjc]

A good reason why not to have joint accounts.  My brother really got the short end when he got divorced.  She simply didn't pay a dime and he filed bk.

[Miner]

As someone who is divorced and one of the reasons was my ex-wife's insistance that whats hers is hers and what was mine was open to discussion.  So I do believe in equally sharing assets and income.  And I'm not against joint credit, just joint credit cards and car loans.  Well, I'll except the 1st car loan early in the marrage since most marrages will last at least that long and usually one spouse needs credit help at the start of a marriage.  But with the exception of a home purchase, joint credit should be avoided at all costs.

At least with a home, it can normally be sold at a profit (lets pretend that is still the case for the majority).  However, cars often can't be sold since they are often underwater on the loan and you need one after a divorce and easy refi may not be possible.  And with CC debt, having a joint card without the savings to pay it off will be hard to deal with in a divorce since the CCC will consider you both responsible despite what the divorce agreement says about who was to pay it.

I'm not saying, plan for a divorce when you get married, but keep your credit seperate as much as possible.  If for no other reason, when one is laid off and you can't pay all the bills, at least you can protect one persons credit so that you can get that home loan 2 years latter.

[GFer]

Well said, Miner!!!

Always plan for the expected and have a 'pillow' to fall back on!

[Anonymous]

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@Miner wrote:

As someone who is divorced and one of the reasons was my ex-wife's insistance that whats hers is hers and what was mine was open to discussion.  So I do believe in equally sharing assets and income.  And I'm not against joint credit, just joint credit cards and car loans.  Well, I'll except the 1st car loan early in the marrage since most marrages will last at least that long and usually one spouse needs credit help at the start of a marriage.  But with the exception of a home purchase, joint credit should be avoided at all costs.

At least with a home, it can normally be sold at a profit (lets pretend that is still the case for the majority).  However, cars often can't be sold since they are often underwater on the loan and you need one after a divorce and easy refi may not be possible.  And with CC debt, having a joint card without the savings to pay it off will be hard to deal with in a divorce since the CCC will consider you both responsible despite what the divorce agreement says about who was to pay it.

I'm not saying, plan for a divorce when you get married, but keep your credit seperate as much as possible.  If for no other reason, when one is laid off and you can't pay all the bills, at least you can protect one persons credit so that you can get that home loan 2 years latter.

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I really agree with you about keeping things seperate!  It's not saying you don't trust the person you love just because you want things to be done seperately, but, that the two of you have a backup plan just in case something happens.  The unfortunate reality is, in most american relationships, the love ends and it all comes crashing down in a divorce, so, no one is invincible.  Even the McCain's have a prenup after 27 years of marriage...that should say much!  lol

The house is a huge investment, and if both are paying, both should be joint & get a piece of the pie.  But, it really doesn't matter, because, in my state, you can finance in one name, but, it's community property and both will get a chunk anyhow.  Vehicles...it won't really hurt to have in both names, because, if there is an accident/incident while just one is driving, it may be wise to have in both names for legal purposes.  But, credit cards, etc., there is really no need to use each other's credit.  In all honesty, I support both parties having their own bank accounts to do as they please, and one joint account into which they both add the same amount each week/month solely to purchase things together.  That system really does work...