Credit, Loans, Divorce, and You

Most people believe that a divorce is the worst thing that can happen to a household, that is until after the divorce and they see what it did to their credit rating. Divorcing couples should understand that divorce isn’t a division of everything and that they will still be liable for a multitude of items.

For joint accounts, both divorcing members will be responsible for the balance. That means that just because your ex got the house if they don’t pay their credit card off it will go on your credit as well. Both credit reports will suffer if one does not pay. Calling the credit provider may offer a bit of relief by changing the joint account to an individual account, or closing it off completely. This will keep a card with no balance from being maxxed out by an angry ex-spouse.

Consider closing accounts in your name where the other party is an authorized buyer. Again, this will keep cards from accruing charges where the angered spouse is seeking revenge. Divorce will divide property, but in the eyes of credit, the two parties are still liable for all charges made on that credit service.

Individual accounts in community property states will be seen the same as a joint account. If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin, you and your divorcing spouse will be responsible for any and all charges made during the marriage; whether on a joint account card or an individual one. Also, the debts and history of payments will be seen on each other’s credit report.

Mortgages and home loans may require a refinancing to remove the spouse from the liability. Seek informed help in regards to commercialized loans.

A general to-do list for divorcing couples is to make sure you’ve pulled your credit and removed all discrepancies, pay off all payday loans, close joint accounts and reclaim your name, open an individual credit account unless you live in a community property state, change your insurance beneficiary, check on your retirement savings and insurance to see if you are covered afterward, and keep financial records for two years until all the dust has cleared.

Divorce is a nasty business, but it is a business. Treated as such, both parties can come out of it a bit better off credit-wise.

How to Improve Your Credit Rating Fast

There are many ways you can improve your credit rating and some of them are unknown to the vast majority of people. It may seem like there is no end in sight when you have poor credit, and the thought of actually obtaining a mortgage can become quite daunting.

If you live in the US, then the first thing you should know is that even if you have terrible credit, you could probably still apply for a $500 loan at whoneeds500.com, or get a mortgage through the sub-prime sector. It may not be an option right now because of the recession, but certainly when the financial economy begins to even itself out. The problem with obtaining credit via the sub-prime route is that the services offered often carry a very high interest rate, usually much more than is affordable.

So how do we increase our chances of securing the elusive low-interest rate? We increase our credit score. This may be difficult, to begin with, particularly if you still have outstanding debts, but it can be done over time if you persevere with it.

The first thing you should do is contact all of your creditors and make an offer of payment. You may have some chasing around to do if it has been passed on to debt collection agencies so the best idea would be to obtain a credit report for yourself and find out exactly what you owe and to which companies.

The advantage of having your debt passed on to debt collection agencies is that they cannot add any more interest to the total amount, regardless of how long the debt is with them. The law prevents them from doing so and as such, you can breathe a sigh of relief, the amount won’t increase!

Once you have an agreement in place with your creditors it is vital that you maintain the payments so as to not repeatedly default on your agreement. Defaults on your credit report raise the red flag and have a very bad reflection on your credit score.

The next thing you must do (and this is absolutely imperative) is to stop applying for credit. That means credit cards, store cards, HP and catalogs etc. Absolutely everything! Applying for credit will leave a footprint on your credit score and repeatedly applying for credit can actually damage your chances of securing what you want.

Assuming you are now paying off all of your debts, not defaulting and have stopped applying for credit you’re halfway to getting a better credit rating. You should also ensure that all of your utility bills are paid on time and make sure there’s enough money in your bank account to cover direct debits and standing orders. Having a returned payment will not only incur charges, but it’ll also reflect badly on your credit score.

If you’re in UK, then another idea is to apply for a prepaid Mastercard through Cashplus. The reason being is that they have a credit builder. It’s explained on their website and is very good at building your credit. It may seem like you’re downgrading yourself if you have a current account already but it truly does help in the long run.

When your debts have become more manageable and your credit score has begun to increase, you may want to consider applying for a low monthly contract mobile phone. These are renowned for increasing your credit rating and even if your credit isn’t great you can pay a deposit to ensure that you get the contract. The idea is that you need to show that you can make payments on time and having a contract mobile can do that for you providing you don’t miss payments!

Be careful not to take out more than you can afford to pay though, you don’t want to wipe out all of the hard work you’ve done so far!

Other ideas are taking out a Capital one credit card, or Vanquis. They offer credit cards with low limits on them (usually around $100) to do pretty much the same thing as a contract phone would do. I have a friend who took one out and used it to pay for his petrol-that’s all. Then he would repay the amount back straight away so as to not incur any interest charges. The result was phenomenal and he now has the highest credit rating in my circle of friends.

I think the last time I asked he had a credit limit of $25,000 spread over various credit cards and every balance was at zero. I am in awe of this fellow and aspire to be like him one day!

It’s been a while but I remember

I had a client who was listed as an authorized user on his mom’s credit card. (I have a mediation service).. anywho, she had filed bankruptcy and passed away at least 3 years prior to him and his wife coming to me.

Well, at the time they were trying to purchase a home and this debt (I believe it was GE), can’t recall was on his credit report, yet it belonged to his mom & she had filed against them in bankruptcy. Well, come to find out yes, he was responsible..but what saved him from the debt was she put him down as an authorized user 3 months before his 18th birthday and I explained to them that they could not enforce a contract on a minor. That is the only thing that cleared him.

He also had no idea he was listed as an authorized user, never used the credit, etc. So I am not sure that all the advice everyone is giving you is correct. I believe they can pursue you..

I would think even more so if you purchased items and signed off on the receipts. If they can verify your signature (even if you signed your mom’s name) on any purchases & you are an authorized user…you have agreed to owning the debt. I say all of this because it takes me to another client who had problems with the DA’s office and that issue came up with her. But, I don’t think she was responsible for those purchases she did not sign for.

If you could clarify your post as obviously

If you could clarify your post as obviously the scenario you have presented makes sense.

I would assume there has to be some sort of agreement that was made when the daughter was added to the account. People cannot be just added at random. Often in the legal mumbo jumbo that is explained (or mailed out that nobody ever reads) you find out what the responsibility of the “signer” is. I would bet that it was disclosed that the daughter was responsible but it was not clear and/or she forgot.

You don’t have to actually “sign” to get the card and be held responsible as long as the details were disclosed. Companies are going to disclose and as Jae knows that if they don’t, they get into a lot of legal trouble.

Actually, people CAN just be added “at random”. That’s why they aren’t liable for the charges. Call any of your current credit cards and attempt to add your pet as an authorized user. Just make sure you give them a middle name 😉

I am sorry to say that you are misinformed

I am sorry to say that you are misinformed. Be an authorized user makes no difference if you are married or not.

I work in the debt resolution field and know for a fact that what you say is incorrect after consulting and helping thousands of clients out of their debt situation.

I do appreciate that you have shared your views, based your opinion is not based on fact.

You use that fact that your father’s credit doesn’t affect yours. But you also mention that you were 15. That is more the reason than anything else, as legally they couldn’t come after you unless your were at least 18.

Of course presumes that your father has defaulted on his debt, if he hasn’t there would be no reason for it to show negative, right?

Being an authorized user

Being an authorized user does not make you responsible for the card if you are not married to the card holder. Think about it this way. When I was 15 I was an authorized signer on my father’s credit card and no where on my credit report does it state this account. Also, this authorized user is not contractually responsible for the debt.

Also, it’s a little different when married couples are involved. If I am not a cosigner but an authorized user on a credit card, I am equally responsible for the debt because we are married.

Or think about this…a business that sometimes have their employees as authorized users. If the business doesn’t pay the debt the credit card company doesn’t have the right to pursue the authorized user. They have to go after the company.

The credit card company can come after you

Unfortunately, the credit card company can come after you for the debt even though your mother filed for bankruptcy.

The moment that your mother put your name on as an authorized user you became responsible for the debt.

This is the trick of the credit cards. It is a fall back for them, and it happens more than you would think. Your mother doesn’t have to pay the bill but you do.

Of course you could refuse but then they would ruin your credit as a result. You might want to try to settle with them for a reduced amount of the balance.

A side note, because your mother has defaulted on the debt and filed for bankruptcy this credit card has probably reported this on your credit report, so settling may be your best option to get rid of it.

best of luck.

My experience is to fight everything

It is possible to ignore your creditors for 7yrs..I’ve done it and much has been dropped off of my credit report. Actually lots. But I made a mistake to fight one and the credit was sold to a collection agency…Yes, he is correct…(I have a good friend who is a collector for a well respected agency) he said the same thing. If you make any size payment…even if it is $5, if you settle the clock re-ticks.

He actually told me that its a trick of the industry…

So you are saying don’t pay the collectors and let it fall off? Also I have some things on my crdeit report that should have been taken/fallen off a long time age. What can I do to get them off?

My experience is to fight everything on the report that you think should be released. I have also had a lot of luck with that. Many times debt has been discharged and still shows past the 7yrs, creditors don’t report back to the credit bureaus, creditors maintain faulty records and/or there are laws about how often a creditor should contact you, via mail, phone, etc before the debt is considered a collection item.

There are sooooooooooo many ways. Although my own credit is not perfect..I have foundt these things to work for me. But, I would not tell you to do anything. You have to know your situation. Everyone’s situation is very different. I had no problems with it. You can’t get collect on something that is not there. Judgement or not..

I learned the hard way also..

I learned the hard way also..years ago. I figured I would make it difficult to be found. I’ve never used my physical address on anything (nothing..not my bank acct, home phone, utilities, etc.) for at least the last 10yrs. I do not own a home just yet but every time I have rented I rent from private owners who usually will not run a credit report (therefore not leaving a paper trail of last known address), I’ve learned to live paying cash only.

Own both of my cars (very nice ones) outright (Don’t believe in car notes anyway). Never give my phone number on anything (have given cell). As far as work related, yes my employer ran a credit report for themselves but my place of employment never showed up on my credit report, nor did the inquiry. Actually the inquiry came from a private agency who worked for the employer.

Now, I have a public employer which makes it easier to find me, but I’m ready for this…taking care of things in a different way.

But, don’t get me wrong if the debt was large enough they would find me I know. Everyone can be found. I work with skip tracers, etc. But, it would take a lot of effort.

Ignoring creditors

Well, I am starting to believe that ignoring the creditors is better! We a re trying to get a mortgage and so started to clean up our credit and it’s has gotten worse!
There was one judgment on ours that we questioned so I got the attorney’s name and they could not connect it to us. It now shows “satisfied” on our report but another one showed up from 2013! It has NOT been on there before.

Well I called the county to get who to call and now we are getting calls from the other one!

So we have gotten burned by trying to improve our credit – scores have dropped almost 100 pts! And we have been much better paying and haven’t used Consumer Credit in over 4 years.

Just my 2 cents….

After my husband and I divorced, he never paid his Sears Charge Card off. I recently found where it was listed on my credit report; however, I was just an ‘authorized user.’ I called them and since they could not find my SS# attached to any of their records, they said I was not liable and they would file a dispute with the credit reporting agency. The representative I spoke with said it could take up to 30 days, so I’m waiting to see what’s going to happen there.

Just thought I would let you all know.

7 year theory

I have a question.

I know that after 7 years things on your credit fall off, but does the 7 year time period start over with each new collection agency that the account is sold to?I have a debt with Discover originally that has been transferred for the 4th time to a new collection agency.

I understand the process of buying debts but on my end,do I have to being another 7 years with this new creditor?

It is only a good idea to pay the settlement

It is only a good idea to pay the settlement if you have the money to do so. If you don’t then don’t pay them.

If you are disputing the charges, then legally they cannot be dunning you. It seems to be an underhanded tactic that this creditor is using.

So, if this is the case then you might to get a lawyer and look at your options under the Fair Debt Collection Practices Act to see if you have recourse. You can collect up to $1000 for each offense under the FDCPA plus attorney fees.

If you wish to see the FDCPA then goto this link.

I am so sorry that you are going through this! We had the same problem with GTE wireless, now Verizon. Anyway, we canceled our phone with them, paid our last bill, then about 6 months later got a current bill that wasn’t ours at all! I called all the people and got statements from them that they didn’t know us, and they were nice enough to send them to me. I sent it all to them and they still said it was my bill.

In the long run, after fighting it for 7 years we just took a settlement with the 5th collection agency that they have sent it to. So after going through what you are going through, I would settle and save the years of bad credit and headache of collection calls. Also, after we paid they updated our credit report to say that we had paid, which looks better then collecting.

Collection agency help

About one year ago, i had an account w at and t wireless.. it was a horrible experience. their billing was a joke. they were double and triple charging our account for phone calls. we had a shared plan.. we have been disputing the charging ( 1562.00) with them for a year. the charges belong to a collection agency and we continue to dispute them. now we are on the the second collection agency, they sent me a settlement for half the charges, so that i could pay them about 781 and settle w them.

i got this letter that week, and the offer expires dec 1. they said in their letter that this is a one time special settlement, but the settlement has to be paid be dec 1 ( cutting it a bit close), and in a one time payment.. is this a good idea? should i do it? the only way that i can afford to pay it, if i put it on my credit card…

if they keep switching collection agencies, i will keep disputing the charges and explain to each collection agency all the errors w their billing systems.

please advise me.

thanks a bunch, i look forward to hearing some solutions. happy holidays! 🙂

What we are going to try starting tomorrow

We are going to start sending the creditors payments on a pro rata plan as Dave Ramsey describes in his book and in this video:

We’ve calculated the total debt and the percentage each creditor should receive and I’ll type up the plan and make copies tomorrow and mail out our payments. I’ll let everyone know how this works out.

Once I get some of the monies that I am expecting we are then going to contact the creditor to discuss settlement amounts. We are hoping that all our creditors will be open to discussing and settling with us.

Does anyone have any experience with settling with your creditors and if so, what approach did you use?

“Settled for lessor amount” question

A “settled for lessor amount” will stay on your credit report for 7 years. However, you can go to the creditor that reported that mark and ask them to report “paid in full”. It never hurts to try.

A settlement is better than bankruptcy, but to say if it is better than a delinquency will depend on the people that look at the report.

Most will not look past the most recent 2 or 3 years. Few look further than that.

There may be other ways to remove the “settled for less” with a reputable credit restoration company but I don’t know them.