Posts tagged ‘debt’

May 27th, 2010

Divorce and Debt Advice

In Divorce, Debt and Credit , you learned that until you are divorced financially you are still joined at the hip in debt.  This article continues with more advice on the divorce and debt arena from some pretty savvy divorce and debt folks I know.

Experian

Experian says, “There are several ways you can prevent credit obligations from making divorce more difficult – and reestablish your own distinct credit lines after divorce occurs. You may wish to consider the following:

  • Communicate with your ex-spouse. Make as clean a financial cut as possible.
  • Communicate with your creditors. Decide which credit belongs to whom, then ask each company and bank that extended you credit to transfer the debt to the name of the person who will be responsible.
  • During divorce negotiations, keep your joint bills current, even if you ultimately will have no responsibility for the debt. If you don’t, your creditors could become more reluctant to release one party from joint liability.
  • Ask the credit grantor to remove your spouse’s name as an authorized user or close the joint account to additional charges.
  • If your spouse runs up large amounts of debt, you should cancel as many of the accounts as possible. Inform all creditors, in writing, that you are not responsible for these debts. This may not prevent them from trying to collect, but it does show that you attempted to act responsibly.
  • Upon your divorce settlement, you and your ex-spouse might consider obtaining individual consolidation loans to cover your share of the joint bills. Pay off the joint bills with your individual loans and close all joint accounts. This helps ensure you’ll be responsible only for those bills you agreed to pay. It also will help you establish or reestablish credit in your own name. “

Points To Ponder From Yours Truly

Though critically important for surviving this terrible time, emotions and so many other issues divert attention away from personal credit and its impact. Here then is a checklist and summary for a potential divorce in order to best protect your credit and rating:

  • Get a bank account in your name only.
  • Get at least one unsecured credit card in your name only. At a minimum get a secured credit card but in your name only. (This should occur whether divorcing or not.)
  • Ask to freeze any joint accounts with an outstanding asset or liability (bank, credit card, loans, etc.) so that both signatures are required before any transactions can be made.
  • Notify all creditors in writing (and call them). Document dates and who spoken to.
  • Have joint accounts closed if a zero balance or if possible have the account placed in the primary responsible party’s name only.
  • Instruct all creditors that you want all authorized users removed except the primary holder.
  • Inform all creditors you are not responsible for charges from that point on if not in your name.
  • Get copies of your 3 credit reports and inform all credit bureaus when the divorce is final. Make every effort to separate your credit file from that of your former spouse.

The primary party of any credit may have to re-qualify with the lender. This also means whoever will be responsible for a mortgage will probably have to refinance in order to remove the secondary party’s responsibility.

MyVesta.com and Divorce.net

MyVesta.org adds the following great suggestions: “Make sure your name is listed on your utility accounts, an item often overlooked by many. When you go to get credit, they often look to see if you have a phone number in your name. If you don’t, even if you are listed in the phone book at that number, it can be problematic.

“Before signing the divorce papers, consider one addendum: change of name authorization. Crazy as it seems, many states require your ex-spouse’s signature before issuing you a driver’s license or other ID in a previous or maiden name. Men who added hyphens during marriage could encounter identity trouble, as well.”

Divorce.net offers very fitting final thoughts:  “Your spouse may be in contempt of court for disobeying a court order that requires him [or her] to pay certain bills. However, if you are jointly liable to a creditor as in the case of a mortgage or co-signed credit applications, your spouse’s contempt of court is NO EXCUSE for your non-payment. It simply isn’t a legally sufficient defense to say, “It’s no longer my responsibility because the court ordered my spouse to pay.”

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The average consumer can eliminate all debt including their mortgage with the money they currently earn in an average 7.5 years. I have been teaching people how to do this for years and you can see how it is done yourself by receiving the free Debt Freedom Mini-Course via email.

You might also want to know that that eliminating all debt is like getting a 40% Tax-free Salary Increase.  If you don’t believe me, read the blog about it.

Posted in Credit Score and Repair | 1 Comment »

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May 24th, 2010

Divorce, Debt and Credit

Divorce, Debt & Credit… Facts you need to know.  Until your debt and credit are divorced, you are not divorced!

 

Before a divorce, during a divorce, and after getting a divorce you need to concern yourself with credit… credit establishment, credit files and credit scores. Though divorce and credit is a concern for both men and woman, woman tend to have the greater credit difficulty due to societal standards. Therefore, I encourage woman of any age or marital status to learn as much as possible from this and other articles.

But for all men and woman, essential credit and financial matters must be addressed when contemplating a divorce in order for either and/or both parties to fiscally survive. Even if legally divorced, until finances are divorced, there is still a partnership as will soon be apparent.

Here are some key points concerning credit that should be dealt with.

Joint Accounts – Joint Responsibility

The Federal Trade commission says: “If you’re considering divorce or separation, pay special attention to the status of your credit accounts. If you maintain joint accounts during this time, it’s important to make regular payments so your credit record won’t suffer. As long as there’s an outstanding balance on a joint account, you and your spouse are responsible for it.”

If you divorce, you may want to close joint accounts or accounts in which your former spouse was an authorized user. Ask the creditor to convert these accounts to individual accounts.

By law, a creditor cannot close a joint account because of a change in marital status, but can do so at the request of either spouse. A creditor, however, does not have to change joint accounts. The creditor can require you to reapply for credit on an individual basis and then, based on your new application, extend or deny you credit. In the case of a mortgage or home equity loan, a lender is likely to require refinancing to remove a spouse from the obligation.

SPECIAL NOTE: any time you open an individual account, you may authorize another person to use it. A creditor who reports (good or bad) credit history to a credit bureau, will report it in the file of any person you have named as “authorized user” as well as your own file.  

BEWARE – Defaulting on a Joint Account

Regardless of any court decision, if one joint account holder defaults on a loan, I guarantee the creditor will not care who the court ordered to pay it. The creditor will definitely come after the other joint account holder. Even if declaring bankruptcy, a creditor will make every effort to reclaim their lost revenue or property from the surviving spouse.

Therefore be fully aware that if a creditor does not agree to transfer joint accounts to an individual, then both of you are still responsible for full repayment to the creditor, regardless of how you’ve agreed to split the bills in the divorce settlement. If a spouse fails to make a payment, a creditor will come after the remaining joint holder, regardless of any divorce agreement. Additionally both joint holders will have negative comments on their credit file regardless of fault. 

Point To Ponder

And from yours truly I add this. Until you are financially divorced with your own credit established, you remain tied to your former spouse. Divorce is not the tidy little package some people would like to think it is. It is not simply a matter of walking out one day. Over and above issues of child support and alimony, there are other financial ramifications beyond the emotional ones. The greater the communication at these times on both parts, the less of an impact there will be to both parties and the sooner the final separation will occur.

Communication is critical in a marriage. It is just as critical in a divorce.


 

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The average consumer can eliminate all debt including their mortgage with the money they currently earn in an average 7.5 years. I have been teaching people how to do this for years and you can see how it is done yourself by receiving the free Debt Freedom Mini-Course via email.

You might also want to know that that eliminating all debt is like getting a 40% Tax-free Salary Increase.  If you don’t believe me, read the blog about it.


 

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May 21st, 2010

Money Talk

Money Talk or “Debt Us Do Part”  is  about financial questions for a couple’s positive “state of the union”.

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Whether you are thinking of getting married, you are a newly wed, or you are a seasoned couple of marital bliss, you must have a joint money talk that includes debt and credit. Money talk is simply not an option. This debt and money talk article can open doors of communication and enhance the success of your marriage. In the case of pre marital situations, money talk may allow you to realize “problems” before they even start.

I firmly believe monet talk offers each couple a superior chance of surviving separation and/or divorce because of financial stress.  It opens the doors of financial communication.

I strongly suggest 4 areas of communication for any couple regardless of how long they have been together:

Hidden Debt and Personalities

  • Openly and without prejudice or pre-judgment share each other’s credit report and ask questions about past performances. For example: Why are there late pays? Why is there no credit history? Explain the bankruptcy. What is this judgment about?
  • Determine and discuss each person’s ability to be a spender or a saver. Do you have a tendency to live paycheck to paycheck or do you have a consuming desire to put at least something away for a rainy day? Do you track every dime or is anything under $10 unimportant to track?
  • Discuss any debts not listed in the credit report.
  • Determine who has what credit lines and what is each person’s feelings on separate credit lines, joint lines, becoming an authorized user and/or co-signing any loans. Similarly discuss checking and savings accounts.
  • Discuss who has what assets and should they be kept separated or joined. (Should there be a pre-nuptial agreement?)

Goal Setting

  • Where are you going and how will you know when you get there?
    Set specific goals together for the next year, 5 years, and 20 years.
  • Read and discuss How to Budget Money and  5  Steps To Change Any Habit (as well as other motivation articles under Best Motivation blog category.)
  • Commit a plan of action to paper stating how you will be accomplishing your goals.
  • List contingency plans when the inevitable “never expected emergency” pops up.

Budgeting and CEO

  • Who will carry the ball?   Who will have responsibility for paying the bills and balancing the checkbook?
  • How will you deal with existing bills? Especially for newlyweds? Will each continue to pay individually or will you join incomes to meet expenses?
  • Together plan out your Budget.
  • Frankly discuss “what if’s”.  No one plans on bankruptcy but what if the bottom falls out? Will you both declare so the one spouse does not have to absorb the other’s debt? What if divorce does happen? What if one spouse dies or becomes disabled? “What if…” and fill in the rest.
  • Will one person be assigned to listen to the partner but ultimately make the final financial decision or will both have an equal voice?

Estate Planning

  • Discuss the existing life, health, and disability needs of each partner. Does it meet current and future needs?
  • Talk to a reputable health and disability representative and determine your needs.
  • Based upon your future goals, what investment strategies do you intend on initiating and when?
  • Who will do your taxes and do you need tax strategies to offset tax payment?
  • How will you develop an emergency savings and how much will it be?
  • Are there education needs expected?

Now for the ultimate marriage counseling tip. Reschedule this exact same discussion for next year and the year after and the year after that. Just call it your “Annual State of the Union Discussion”.

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Special Note:  The average consumer can eliminate all debt including their mortgage with the money they currently earn in an average 7.5 years. I have been teaching people how to do this for years and you can see how it is done yourself by receiving the free Debt Freedom Mini-Course via email.

You might also want to know that that eliminating all debt is like getting a 40% Tax-free Salary Increase.  If you don’t believe me, read the blog about it.

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