Divorce and the Two Types of Credit Accounts
Married couples share a lot of things, their assets and finances included. When they get divorces, all of this sharing can cause problems. For example, how should assets be divided? Another problem that arises relates to credit accounts and the paying back of debt. When couples divorce, who should pay back the debts, for example on credit cards? To avoid these problems, people need to be aware of the two types of credit accounts: individual and joint.
Individual Credit Accounts
When someone applies for credit, he or she can make the application part of an individual credit account. For individual credit accounts, only the incomes, assets, and credit history of the applicant are considered. Moreover, only the applicant is responsible for paying any debts associated with the account. People who are worried about their spouses negatively affecting their credit account should open an individual credit account, but if they need the their spouses’ credit record to help them open an account they may have to open a joint account.
Joint Credit Accounts
In contrast to individual credit accounts, for joint credit accounts both the applicant’s and his / her spouse’s incomes, assets, and credit histories are considered, and both spouses are responsible for paying back debt. When an applicant applies for an account with his /her spouse, he /she is more likely to get the credit, but there is a risk that the spouse will not help pay back the debt and thus hurt the applicant’s credit.
Divorce
People who are getting a divorce and are disputing payments on credit accounts need to keep in mind that if the account was originally a joint account, both spouses can be held liable to pay back the debt. Even if in a divorce agreement both spouses agree that one of them has to pay back the debt, if the debt was originally part of a joint account the creditor can demand the other spouse pay back the debt. Before finalizing a divorce, spouses should consider closing any joint accounts that they have to avoid any problems.
Consult a Frisco Divorce Lawyer
If you are considering a divorce, there are a lot of things you will have to consider and manage. A lawyer can help you address the legal matters. For more information, contact the Frisco divorce lawyers of Alexander & Associates by calling 972-420-6570.
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