New Page 1

Glenn Reeves, Owner

Sheila Lange, Manager

DIVORCE: FREQUENTLY ASKED QUESTIONS 306 N. McGee

Borger, TX 79007

A divorce decree does not Phone: 806-274-5346

relieve you of your liabilities. Email: glenn@txcredit.com

If you think your divorce decree can change your obligation to pay back the joint debts you incurred while married, you are wrong. You are responsible for joint accounts. A divorce decree has no impact whatsoever on your joint debts, including credit cards, car loans, home mortgages, and lines of credit.

If a divorce judge orders your ex-spouse to pay a specific bill in a joint account and your ex-spouse fails to do so, you are still legally responsible for paying the debt. If your ex-spouse pays late on a joint account, the creditor has a legal right to report negative information about you to a credit bureau. If your ex-spouse does not pay at all, the creditor can ask you to pay. If you refuse or are unable to pay, the creditor can take legal action against you.

If you have not yet separated, protect your good credit.

The first thing to do is perhaps the hardest: "Talk to your soon-to-be ex-spouse." Even in good times, many couples find it difficult to discuss money and other financial issues. When divorcing, it is more important than ever to make as clean a financial break as possible.

Look at all your debts, including mortgages, car loans, credit card bills, student loans, and lines of credit. Did you both benefit equally from the debt or was the "joint" debt really a personal expense? Analyze the debt and decide who should be responsible for each.

Keep paying all your bills.

During divorce negotiations, continue paying at least the minimum amount due on your joint bills, even if it means paying bills that ultimately will not be your responsibility. If you do not pay, missed payments will be posted to both of your credit reports. Even if you later pay the amount in full, the delinquency may remain on your report for as long as seven years. That will make it more difficult for you to obtain new credit in your own name, and your creditors could become more reluctant to release you or your ex-spouse from liability on your joint accounts.

Call each of your creditors.

Different credit grantors have different policies regarding divorcing couples and joint accounts. That is why you need to "contact each one of your creditors" and discuss whether you or your ex-spouse will have ongoing liability for each of your accounts.

Ask each of your credit grantors how to remove your name or your spouse's name as an authorized user. Credit grantors do not have to honor your request, but some will if you can prove that one of you is the sole user of the account.

Ask them how to transfer your joint debt to the name of the person who will be responsible. Creditors do not have to agree, and they may defer a decision until you prove you can handle the payments alone. Usually, both of you must sign an agreement with the creditor to release one of you from liability.

Another solution is to close all your joint accounts and open new accounts in your individual names. Request that your joint accounts be closed to all new charges. If your joint accounts have balances, obtain individual consolidation loans. Use the proceeds to pay off your joint accounts, then close them.

You also may want to notify your creditors, in writing, that you are not responsible for the debts of your soon-to-be ex-spouse after a specific date. Send the original by certified mail and keep a copy for your records.

Establish credit independently for yourself.

To establish credit individually for the first time, start small and build up. A local department store or lending institution is a good first step. Even if you do not have other credit, you may be able to obtain a credit card with a small credit limit.

When you get the card or loan, use it. Consistently pay your bills on time. Each month, your creditor will report your payment information to the credit bureau. In this way, you will establish a history of responsible credit use. Use only credit grantors who report to credit bureaus.

Phone: 806-274-5346

Fax: 806-274-4327

Email: glenn@txcredit.com