What About Our Debt

Yours, Mine or Ours?

                                                                                              

What Kind of Account(s) Do You Have?

Joint Account 

When a credit card company or another lender (Credit Union, Finance Company, Loan Shark) agrees to a "joint" account, they rely upon the credit history, assets and incomes of both applicants when they extend credit or make a loan. Both applicants are responsible for repaying the debt on the account, and the account’s payment history will be reported on both of their credit reports.

Individual Account

On an individual account, only the applicant’s credit history, assets and income will be relied upon by the creditor in extending credit. The individual is responsible for paying the debt on the account, and the payment history of the account will appear only on their credit report.

Authorized Users

With either type of account, the "owner" of the accpont can authorize others to charge against the account. These "authorized users" are not liable to the creditor for the debt they creare. The “owner” of an individual account can authorize another person (a son, daughter, or a paramour) to charge on the account. You might do it for a college bound son or daughter. But if things turn South, and Johnny or Cathy are taking cash withdrawals to fund a habit you didn’t know about, and they “run up” the debt, they are not liable to the creditor for paying the debt. Only you are legally responsible to pay the debt, and the adverse payment history will appear on only your credit report. Be careful about whose name you put on the account.

Divorce Does Not Solve the Debt Problem!

If you have a "joint" account, an agreement that your spouse will pay the debt does not get you off the creditor's "hook". If your spouse fails to pay the debt, the creditor can sue you. If your spouse has disappeared or is in financial trouble, the creditor will collect the entire amount from you. If you are forced to pay the debt, you can sue your spouse. As a practical matter, if the lender cannot collect from your spouse, you will have no easier task. Here is a Concurring Opinion--Your Credit Card Agreement Trumps Your Divorce Agreement.

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