How your ex could destroy your credit
Filed under: Credit, Relationships, Credit cards
When you're building a relationship, building joint credit feels like a natural rung on the ladder. But if the romance happens to sour, that same joint credit can become the backbone of financial devastation.
Scores of the newly divorced, separated or uncoupled who have co-signed for cars and leases or have joint plastic tucked in their wallets are left holding all -- or most of -- these financial bags post breakup. And those bags can get pretty heavy.
"That means someone may be stuck trying to make payments he or she can't afford," says Dan Danford, principal and chief executive officer at Family Investment Center, a commission-free investment management firm in St. Joseph. And that can impact your credit.
Even though few people enter a relationship with the intention of ruining their new mate's credit, many experience this unfortunate outcome of uncoupling. "Beyond not being able to pay your own bills, an ex not paying his or her share of joint accounts can be especially dangerous," says Danford. "Normally, a person knows they're not paying their own bills. But it's common for people to not know an ex hasn't paid until they're served a summons or being hounded by collection agencies." Which means months of late or missed payments have already been reported to credit bureaus and lowered your score.
"I had no idea my ex wasn't paying off the bills he agreed to take on after we split up," says Chloe Martin of Chicago, Illinois. "I found out by accident, when I tried to make an appointment at the vet's office and was told the account had been sent to collection."
According to a survey conducted by LeaseTrader.com, an overloaded budget and the potential of a shattered credit score are plaguing new singles, or those on the verge of being legally single again. The survey says the most common bag a person is likely to be left holding is housing: rent or mortgage. Car loans and leases, credit cards (major cards as well as retail (store) cards), property damage/repairs and pet responsibility round out the top five heaviest bags.
That's why experts say it's wise to check the number of financial bags each of you are -- or might be -- carrying now. Just in case your relationship hits a bump later on.
Protect your score
If you're about to be riding in the single lane, Danford says the best way to protect your credit is to communicate. "Make sure you've told everyone who needs to know that you're now [or soon to be] single and discuss what you're responsible for." Most importantly, he says you should note what you're not responsible for. "That will eliminate a lot of the confusion and potential plunging of your credit."
Other helpful tips:
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Years after a split, both names could remain on a property's mortgage or deed. To thwart confusion, notify all lenders of your split and ask what formal notification is required to properly re-title the account or assets and amend the title. "Just having a divorce decree isn't enough to accomplish this," Danford cautions. "In most instances, separate steps must be taken."
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Close joint accounts that have zero balances and notify all creditors -- including bank lines of credit -- that you want to block any new charges.
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Formally notify all three credit bureaus (Experian, Equifax and Trans Union) of the split and division of debt. "It can't hurt to have a written notification in your file in case a problem arises later on," advises Danford.
Preventing a problem
Uneven financial bags can also hurt those who are happily married or newly committed. Renee A. Hansen, a senior financial adviser with Ameriprise Financial Services and a private wealth adviser in Phoenix, suggests that the best way to handle a financial meltdown is to sidestep one altogether. "Keeping credit accounts separate is really the best way to go," she advises.
"In the event one person loses their job or is suddenly unable to earn an income [due to illness or accident], the other isn't left in an unrealistic financial position," Hansen continues. Translation: You won't get stuck carrying more financial responsibility than your income can handle. She adds, "It's not about 'sticking it' to your mate. It's about protecting one-half of your household's credit score."
That protection, Hanson says, comes from partners making sure they aren't responsible for more than they're actually able to pay and not, Hansen adds, "what they 'hope' they can someday pay."
Balancing bags
A semiannual review of what you're both bringing in vs. what needs to go out, Hansen says, keeps bags balanced fairly. "Pick two times a year that are easy to remember, like when you file your taxes and your birthday, or when the clocks change for daylight savings time, to review your financial picture," she suggests.
She also urges separating financial obligations whenever possible -- no matter how solid your romantic union is. "This lets you both build solid scores," she explains. And in the event one of you takes a hit, the other's credit won't suffer as much as if everything were linked together.
"Carry utilities in separate names, too," Hansen suggests. "One can take the electricity, the other the phone."
Not mixing credit with love is especially helpful for unmarried couples. Those at the greatest risk in this situation are cohabitating couples. "Without the ability for a judge to divide debts via a divorce proceeding, this can get very ugly," says Danford.
Danford recommends couples (married or not) review their credit scores together. "An annual review keeps everyone in the loop on where your household stands." It will also indicate a problem. "Reviewing scores can help a couple determine if one partner's credit is over- or under-exposed," Danford says. "It can indicate areas that need tweaks and adjustments before a major crisis arises."
The bottom line
The most in-love of lovebirds should always think twice before co-signing on the dotted line. "You've got to consider how co-mingling credit can affect either of you in the long run," cautions Hansen.
And in the unfortunate event your relationship does sour, don't expect your ex to carry through on financial promises made while you were still a couple. Danford says it's quite common for those promises to be swept under the carpet during a divorce or break-up.
If you do get left holding the bag, credit counseling and debt repayment programs can help. "Many creditors will arrange for payment plans," says Danford, "after being given a copy of a divorce agreement."
Gina Roberts-Grey is a freelance writer specializing in consumer issues.
Reader Comments (Page 1 of 1)
11-06-2009 @ 8:28PM
zoey said...
Wrong guys. I got a divorce and went to court to get things done correctly. On the court document it stated my husband was to be responsible for the house and for his truck. Both of these items were in both names. Guess what? The house foreclosed and the car was repossessed. This was reported on my credit. I told since I signed the original contract I was still responsible. Enough said.
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11-06-2009 @ 8:34PM
gr8bsn said...
Well, you can do what my good friend's cheating ex-succubus did. Right after she got caught having an affair, she opened up several new credit cards (in both their names), got full cash advances up to their limits, and then left him with the bill. She was probably blowing her lawyer too because there's no other explanation for how she got away with that.
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11-06-2009 @ 9:23PM
Suzy said...
Zoey, the same thing happened to me. I left my 1st husband, five months after our son was born, 19 years ago. I got a lawyer -however he did not have counsel at all. I know it was a money issue but hey, I was the single parent at the time, and I still got an attorney.. He may have charged on a "sliding scale" basis but he was an affordable attorney. Anyway, this crackpot attorney kept telling me, after I was asking him all the time whether or not, I should remove my name off the mortgage. The attorney I had, literally said "not right now. You can deal w/ that later." Well, later came sooner and the bank had foreclosed on the house and my credit was bad for a long ten years! What a jerk.
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11-06-2009 @ 9:21PM
Paula said...
Been there, done that. My ex was supposed to take care of the mortgage, didn't make the payments for a year, filed bankruptsy and I got stuck with a forclosed home which wound up with HUD, sold by them and now I'm stuck paying the sales tax.
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11-06-2009 @ 9:34PM
pattieann said...
I have been divorced for 17.5 years. He lives in another state and from what I was told from mutal friends he got remarried just about 5 years ago to a gal 5 years older then him, but whats so strange is he married a gal with the same name as me, Patricia ann, I was the first and orginal, his family couldnt stand me so I am sure they are loving the #2. Even though we have totally different birthdays and socials I check my credit reports just to make sure mine doesnt get messed up. At least on the funny side of it all is at least he wouldnt call the wrong name out in bed
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11-06-2009 @ 9:56PM
pattieann said...
My ex lives in a different state than I do, we have been divorced for 17.5 years now. From mutal friends they told me he has since remarried, well the stupid ass married a gal that is 5 years older then him and her and I have the same first and middle name, yes he married another Patricia Ann. Luckily we have diffferent birthdays and socials. So I am forever checking my credit since I worked so hard to build mine up. I was the first and his family didnt care for me so I am hoping they are loving this one. But on the lighter side of it he wont get busted for calling the wrong name out in moment of passion, if there is any since she is 5 years older then him.....
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11-06-2009 @ 10:38PM
Patricia said...
Divorce Attorneys, Mediators and (the good ole' boys) factor greatly DETERIATE the financial well being of both parties. Three years, I've awaited my alimony case to be heard; finally, scheduled for 1-21-2010. Both parties attorneys have played the victum card of conflicting schedules, play passive/aggressive advisors, duplicate "discovery" subpeneas, sucking any and all financial resources, (all the while) encouraging their clients to make minimal credit card payments and chalk it up to "marital debt" and then when the creditors' (learn you're using your credit card to pay for legal fees, due to seperation or divorse, they decrease your credit line and double your interest AND there's nothing left for the attorneys to replenish your escrow account, so they (the attorneys) drop you as their client. Then they refer you to a local Bank Ruptcy Attorney.....ONE SEVERE RACKET.
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11-06-2009 @ 10:53PM
ann said...
Ladies, keep your own credit cards (not joint) if you have any prior to marriage (and hopefully you do in this day and age!!!) Assets before marriage? Keep in your maiden name!!!!
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11-06-2009 @ 10:55PM
Lotte said...
A heads up to all! It's NOT just "exs" you have to beware of! I was separated from my 'ex' when I had a very bad health issue arise - in fact that I'm here at all is a testament to my wonderful doctors. However, I went through several years with major issues that affected my ability to handle day to day living. My oldest son and his wife (who literally was like a daughter to me) had been staying with me before the separation and when the health issue arose I asked them to stay as I was not allowed to live alone. If they had not stayed, I would have had to hire someone or gone to some manner of assisted living.
Because of the "issues" I asked the daughter-in-law to handle my monetary affairs and put her on a number of accounts. Things were fine for a number of years, however there DID come a time when (unknown to me), she decided she was going to change her life - by having several affairs and then leaving my son. Unfortunately for me, she decided to use MY money to bankroll her fun and she drained the accounts, ran up the cards using cash advances, and then ran! She still has warrants out for her arrest!
The upshot is MY credit is totally destroyed and since my health is even worse now, I'll never be able to work again and try to get out of the hole! Oh, BTW, don't believe the credit companies when they say they will "work with you" when you have problems! I tried to work with all of them and got screwed from one end to the other! Their main idea is that they will allow you to pay "less" than the full amount owed, but they want it NOW in one lump sum - they aren't going to be out a dime as what they want is usually the amount charged minus fees...not a "break" or help at all!
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11-06-2009 @ 11:31PM
hotrodqd said...
too all you dudes .....running around kissing all these insatiable women who left their husbands or cheated /cheating on them ....when you kiss her ??? just remember our ----s were in there and everywhere else !!! lmbo !
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11-06-2009 @ 11:35PM
hotrodqd said...
want to save america and our childrens future ???? outlaw credit and credit cards and give everyone food stamps ....just think if congress had given that stimulus money to the small people of america ...how many would be out of debt or starting theyre own businesses creating jobs !.....not giving it away in bonuses or sitting on it !
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11-07-2009 @ 4:51AM
smileyface said...
wow we should all band together!! My ex husband well Ifirst got a clue something was up when he called the house and asked fora different girls name?What a slap in the face!! To make matters worse he opened several credit cards in my name (guess he hasthe girl sign for them? who knows!! After not paying anything and maxing them off the sheriff came to the door , well I had no idea what he was talking bout, this wasright after he had left?long and shortof it. My lawyer mad a few calls and unfortunatley, what it would cost to hire a lawyer my lawyer in fact to fight thu thiswould end up costing me morethan the the 15,000 k . So I have to pay to try and rebuild MY credit, which in turns buillds his cause Im payng off the damage he did. Talk about frustrating!!!!!!!
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11-07-2009 @ 4:14AM
ellie said...
Divorced for 17.5 years huh? You seem a bitter that your ex has moved on. "Patricia Ann" is not a very unusual name it's kinda like having the last name "Smith or Jones".... Also, if she's a cougar (a woman who likes younger men) well... good for her! I am sure they have plently of action in their personal bedroom or he'd be with someone younger (if age is what YOU think slows down the fun drive... LOL) ... maybe he calls her his wild cougar kitty instead of cow patty !
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11-07-2009 @ 4:22AM
Steven said...
A WARNING TO ALL WHO ARE DIVORCING: If you live in a Community Property State like I do in California, and say you have credit cards (or other property/debts) ONLY in your own name/own social security number, your spouse is responsible for the debts/charges incurred on that card too while you were still married living under the same roof (once you seperate/divorce--move out-- the new charges are only your responsibility). That's because all debts (like assests) are considered community property and BOTH benefited from the card even though it's in your very own name. So credit card companies can come after your spouse if he/she has assets. It makes no never mind what your divorce papers say as it pertains to dividing assets. The credit card companies are looking for someone to pay the debt wherever they can legally.
HOWEVER--if you got a really good attorney (like a bankruptcy attorney OR Contract Law attorney would be great too and they know the laws--you don't nec. have to file for bankruptcy per se), your spouse could rightfully argue under Standard U.S. Contract Law, he/she does not have a legal contract/association with the credit card company (even if she/he was just an "authorized user"--but not an underlying responsible party for debts; that is if you didn't co-sign w/a Soc. Sec. number etc.) and they can't be liable. Contract Law typically prevails over all other underlying laws including Community Property States.
As I told the credit card company: "I'm not responsible for my ex's charges on this card. You don't have a legal binding contract/association with me and never did. Show me that I do and I'll pay for the debt. You never asked me while we were married to compel my ex to put me on as an added responsible party. You just can't collect from me via guilt by association. It's got to be legal. You can't make a contract be "convenient" for you Credit Card company if/when it doesn't serve you after the fact. So I told them to go buzz off and pound stand." Eventually they left me alone and I was immune under Contract Law. Contract law is powerful esp. if you didn't sign for something. A company needs to have a binding contract/association with you to have legit case.
Actually, under U.s. contract law, an corporation, which is a fictious entity, they cannot have a legal binding contract with an individual person. Contracts are only valid between two individuals/persons. A Friend used this argument against a credit card company which he didn't have a legal **SIGNED** contract anywhere with a specific person at the card company under contract law. He asked the company to produce something with his signature on it with another person's signature to make it valid, and he'd pay. They couldn't. He also asked them to produce an "invoice" of what he owed because a credit card "statement" is not a legal binding document/bill of a transacted purchase and sale. BUT an invoice of is. They couldn't produce an "invoice" of course for each/every charge nor a mutually signed contract. He won his case! Never paid a dime to the card company. The judge was flustered because he was right under business contract law -- contract law is contract law. There is no prevailing law that you have to pay. But for a contract to be valid, there are laws on the book. Also an invoice is considered a legal doc/contract of a transaction--a "statement" isn't.
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11-07-2009 @ 6:17AM
Vicki said...
Past 5 yrs I worked on my husband's credit reports all 3 is now 706 (score) All those yrs when he was married to the so called ex while he was in bagdad,She didn't keep up all bills & his truck ins,plus his electric bill; She & her grown kids even forge his singnatures on chks to withraw money to spend & He always had to send extra money.Until I took over~There hasn't been no more disconnections or loosing anything like he had lost alot by being married to her~ Yrs they have been divorced & While I'm here she still try using my husband's SS# & Address & Use our last name instead of her maiden name to get credit cards ect......I found that out while I worked on my husband's credit reports past yrs~ How I fixed it; I looked up her new address & gotten her SS# ,Age & Birth date & sent to whoever she tried or did get credit for purchases & I put an alert on his credit report for fraudlet against anyone without our permission/they have to contact us first before anyone tries to get credit or to purchase anything!!
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11-07-2009 @ 2:37PM
Laura said...
You are very correct. It appies to all bills. My ex was court ordered to pay all hospital bills. Mine and our daughters. He quit his job and now works under the table. I am now held resposible for these bill. The lawyers for the bill collectors will just by pass suing you for all bills and start a garnishment. At which you dont have to be present in court for them to do. I submitted my divorce papers to them and to a judge in one county. The judge ruled my ex to pay them a 2nd time. They waited till I moved to another county and to me to court to garnish my wages. I called them and they said tough . They dont care who was supposed to pay the bills as long as they get money from someone.
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11-08-2009 @ 8:28AM
Vicki said...
Laura~ Get a Child Support case against him, Then it will get him to realize to pay or jail & You can use the money!! But,Still open up credit report & Put not mine belongs to ex & Keep fighting don't quit & That is how we won against my husband's ex :) If you want more advise you can email me @ LewisRash@aol.com
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