My brother has filed for divorce. Ex wife to be left him and there 11yr old son. Of course she has left him in debt, most of the Credit debit is hers that she applied for with joint. What should he do? What steps should he talk to protect himself and and not ruin his credit history.
My opinion after reading a gazillion horror stories with no possible satisfactory outcome: If it were me, I would draw up an agreement with spouse (soon to be ex) that 1) the joint accounts would be closed. 2) I would make the payments on them. 3) Spouse would pay me xx.xx dollars a month for xx months. 4) I would try to secure this debt with something the ex owns that they do not want to lose (if possible). I would have this drawn up outside the divorce agreement, or I would not agree to anything else the ex wants, including the divorce. However, I would try to have the court take this into consideration in settling other financial matters pertaining to the divorce. Then I would contact the card companies, and ask them to transfer the balance to a different account that is in my name only, or I would BT everything off these cards and onto existing cards that are in my name only, so that ex's future credit problems would not become mine. I would have a lawyer check it all for loopholes and refinements.
If the husband/wife died you would have to transfer the balance and account to ONE PERSON...so it can be done in this case also...
What state do they live in? Is it one of the dreaded community property states? Are there any assets involved, house car, or stocks? In general all joint assets and debts should be liquidated and paid off if possible before the divorce. If there is no money to pay off the credit cards, then he should be aware that what the judge says is irrelevant. He is on the hook for the money legally for all the joint credit cards. Even if he closes the accounts now, with a balance on the, a dumb thing to do because the credit card companies will probably raise the interest rates, once the accounts are paid off, the ex can reopen them again. It is a common misconception that a divorce court can settle financial maters regarding debts. This not true. "IF YOU DIVORCE: 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 wonâ??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. Or 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 to individual 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." http://www.ftc.gov/bcp/conline/pubs/credit/divorce.htm I wish him luck. Divorce checklist: http://www.divorce-online.com/articles/f32206.html Link on divorce and assets: http://financialplan.about.com/library/weekly/aa082499.htm Book on divorce and money: http://www.nolo.com/lawstore/produc...51-5D74-474D-A04CF25A3891F381/sampleChapter/1
Just speculation on my part - I know it depends on the card company, but.... If I call my card company, with whom I have done business for whatever number of years, and tell them what I am doing, I think I would have a favorable chance of them NOT raising interest rates if the account had to be closed with a balance on it. I would do all in my power to avoid this, however, and I would ask them to open a new account in my name only and transfer the balance to the new account. But I would not leave the account upen under any circumstances. An open CC account, with ex on as joint, is inviting trouble. I woud not leave it open, I would do something - anything - else. Even though the divorce may be on good terms, and everyone is financially on solid ground, the one thing you can depend on is this: things change.
That's one of the community property sates. "The laws in the state in which you reside help determine how your assets are divided in a divorce. Nine states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) are community property states, which means assets acquired during the marriage by either spouse will generally be divided equally. The remaining states are based on "equitable distribution," which does not necessarily mean an "equal" distribution. The court will consider many tangibles and intangibles in coming to a decision on how to divide assets." http://financialplan.about.com/library/weekly/aa082499.htm In a community property state debts as well as assets are divided equally.
