Debt Responsibility After Maryland Divorce
Money Can’t Buy You Love But It Can Put You in Debt: Your Financial Divorce Questions Answered
You and your spouse have made the decision to end your marriage. You’ve figured out who is going to take the house and who is responsible for your vehicle. Although you are on the right track to having it all settled, there’s still the issue of debt.
Credit card debt plays a major role in divorce. Your credit score could take a serious hit if you are stuck with your ex’s debt, or you could come out in the green if you are able to transfer the debt to your former spouse. Navigating this aspect of divorce is tricky, and here we try to answer some of the most pressing questions.
Are You Responsible for the Debt?
If your husband used your credit cards to pay off his school loans, purchase books, or even buy a new set of golf clubs, you won’t be held responsible for those purchases, right? Unfortunately, this probably isn’t the case. Credit card debt is often seen as shared between you and your spouse, even if a majority of the purchases were made by or for your ex.
Credit cards and purchases that were taken out before you and your spouse became married will probably be the responsibility of your ex, but anything done together is likely considered both of yours.
Can Canceling the Cards Help?
You want to leave your spouse, but you also don’t want to be held responsible for the debt that was racked up during your marriage. Even if you were thinking about paying off all of the debt, doing so would take years, so you would have to wait even longer before you can actually leave your spouse.
In an effort to get out of paying for the bills, you cancel your credit cards. Unfortunately, however, this doesn’t eliminate the debt. Canceling the cards could stop you or your spouse from adding additional charges onto the cards, as they are no longer in use, but the balance will remain until you pay them off.
If you cancel the cards and forget about them, your credit will suffer greatly until the debt is resolved.
What are Our Payment Options?
Unfortunately, there usually isn’t any way to eliminate credit card debt short of paying it off. It is understandable that you wouldn’t want to pay off the entire balance yourself, particularly if both you and your ex used the cards. Fortunately, you have a few payment options:
- Pay off the joint cards together, from a shared bank account.
- Divide up the debt that occurs on shared cards and transfer it to each spouse’s individual cards.
- Have a mediator create a signed agreement that clearly states who is responsible for paying the debt on each card.
Can My Ex Hurt My Credit?
If your ex decides to stop paying bills that are in both of your names, or in your name alone, your credit could be negatively affected. The companies that receive late payments may report the delinquency. This default could show up on your credit report and hurt your credit score, even if your ex is to blame.
How Can I Protect Myself?
Credit may be something you never thought about when you were married. You may have done everything that had to do with finances together, such as buying a home or leasing a car, which means you didn’t really pay attention to your score.
Now that you are single, however, paying attention to your credit is extremely important. Now that you are on your own, you will likely need to put everything in your name, such as your home or cell phone. In order to get these things, you’ll need to have decent credit.
Now is the time to request a copy of your credit report. With the report, you’ll have access to your credit score and can examine all of the accounts that are in your name. You can also address any discrepancies you may find on the report.
Open up a savings and checking account at a different bank than where you have a joint account with your spouse now. Start putting some money in there now, too, so that you are better prepared when you end the marriage.
You should also open a few credit cards in your name, as well. Not only does having a couple accounts of your own help to establish your credit, but they are also good to have in emergency situations. Do this well ahead of time, as credit cards often take some time to obtain.
Although changes have been made to the Credit Card Accountability Responsibility and Disclosure Act of 2009 to allow non-working spouses to apply for credit in their own names based on shared income, it can still be difficult to get approved if the income isn’t actually yours. Get started on this as soon as possible.
Hire a Lawyer
An attorney is there to fight for you and help you get through this difficult situation as best as possible. You will always have someone on your side who is willing to go to bat for you when things get rough.
A divorce lawyer from Jimeno & Gray, P.A., can provide you with advice and assistance through every step of your divorce.
Contact the law offices of Jimeno & Gray, P.A., to find out how we may be able to help you. Request your free copy of the book What Your Spouse Doesn’t Want You to Know: The Ultimate Guide to Divorce in Maryland, written by attorney Frank C. Gray, Jr., when you call.