Divorce can bring about a lot of stress and pain for both parties involved. Aside from the emotional impact, each one also has to deal with serious financial matters. The internet offers numerous divorce articles that may give you valuable advices. Let’s consider the financial aspect of divorce and discuss the ways on how you can prevent possible financial problems.
In order to understand and anticipate financial complications that can be brought about by an impending divorce, we need to understand the two different types of accounts involved.
The first one is the individual account. This is the account that a person has acquired when he or she was still single. An individual account means all your transactions made in that account are solely your responsibility. All debts incurred using that account will be in your name and liability. All transactions made in your individual account are also reflected in your personal credit history.
A person with an individual can authorize another person to use the same account. When you got married, you may have included your spouse as an authorized user of your individual account. This means, the authorized user may incur debts using your account. However, these are all reflected on your credit report, not in authorized user’s credit. Hence, you are still accountable to pay for all these debts as long as it is in your individual account.
Joint accounts are accounts that are opened by a married couple. This means, both of them can use the account and both of them accept to take responsibility on the debts that shall be made using the joint account. While the marriage is going great, a joint account does not pose any problems. But when the couple divorces, complications may arise. For instance, one of them might default on paying the debts they incurred when they were still together. Worse, one of them might incur new debts after the divorce and default payment. Thus, the other spouse will be forced to pay for these debts that are supposed to be paid by both parties.
Dealing with Finances
Clearly, when it comes to finances, it is important to take the necessary measures in order to avoid possible problems. If you have designated your spouse as an authorized user of your individual account, call your bank and request that the authorized user be removed from your account.
If you and your spouse have a joint account, it is advisable to close this account as soon as possible. If both of you are still paying for a balance in your joint account, you can ask your lender to distribute half of the balance to each of your individual accounts. It is important that you are spouse talk about this matter and agree that the balance will be split in behalf between the two of you.
It is not unusual for credit and divorce to create problems. A lot of divorced couples have experienced a lot trouble in dealing with such circumstances. Thus, in order to save yourself from such possibilities, it is best that joint accounts be closed and authorized users on your individual account be removed. This way, you can manage your debts more efficiently and you can be assured that your credit report is protected.