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When filing for divorce and what to do about shared credit

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Divorce is a hard thing to deal with, but finances can just make it all the worse.

Joint accounts are the worst, the couple are dealing with joint credit cards, installment, auto, and mortgage loans. The creditor is going to hold both parties responsible, and if either one misses a payment they are going to be sure to report the negative mark to the credit reporting agencies.

Medical debt is different, even if one party was just responsible they are still going to go after both parties because they consider medical debt to be family debt. This also includes utilities too.

Spouses seeking divorce will go to the court house and divide up what each person should pay, then they try to forward these documents to the creditors when they try to collect from the wrong person. Unfortunately the creditor most likely won't acknowledge divorce agreements. They will still come after both parties.

What usually happens is that the injured spouse will have to pay the balance due, just not to get a negative mark on the credit report. Then they have to sue the other ex-spouse for damages to make back what they lost. If they win a judgment gets entered on the ex-spouse's credit report. And should he or she pay, then the injured spouse would have to update the court house to show payment.

Unfortunately the ex-spouse instead of paying will run to the court house and file bankruptcy - and include the injured spouse in the bankruptcy making it impossible to collect the balance.

What should of happened in the first place, was that both parties contacted the creditor before splitting up, let them know about the divorce and interest in separating the account. Closing and opening up new accounts under each person's individual name. If the account has no balance this is easy to do. But if there is a balance often the creditor will say that the balance needs to be paid before they can separate the account.

If the balance is too large to pay off, then the one responsible for the debt should apply for new credit or installment loan to balance transfer the debt over. Provided the ex-spouse wants to be helpful.

Just some things to know about when filing for divorce.

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I did forget one thing which some one corrected me on. The family type debt is only applicable in community property states, if a creditor tries to bill the spouse she has a defense against collection efforts.

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I needed to add another point, even with the divorce decree, the mortgage loan won't remove responsibility until the spouse taking the house refinances into her or his name solely.

Some consumers can find the same requirement on auto loans, if the creditor wants to be a pain about it.

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