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Ask Dr. Don

My husband ruined my credit

Dear Dr. Don,
My husband has filed a Chapter 13 bankruptcy and included our joint accounts. I did not file, but it is showing up that I filed too. Will that hurt my credit, and if so, how can I get out of this and clear my name? Will anybody give me a loan so I can pay these bills off just in my name?
Denise Debts

Dear Denise,
A joint account means a joint obligation. Your husband had to list all his debts on his bankruptcy petition. A Chapter 13 bankruptcy requires the petitioner to come up with a repayment plan to pay down his debts over a three to five-year period. If he sticks to the repayment plan, then the bankruptcy court can discharge any remaining eligible debts at the end of the repayment plan. If your husband doesn't repay the joint debts under the repayment plan, however, the creditors can then look to you for payment.

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According to page 24 of the U.S. Courts publication, Bankruptcy Basics, "Specifically, after the commencement of a chapter 13 case, unless the bankruptcy court authorizes otherwise, a creditor may not seek to collect a consumer debt from any individual who is liable with the debtor." (Please keep in mind that I'm not a lawyer and this doesn't constitute legal advice.)

Getting a loan in your name to pay off the joint debts will replace jointly held debt with debt that is held in just your name. It won't take the bankruptcy information off the joint accounts on your credit report. It will also change the structure of your husband's repayment plan, since those debts will no longer be his.

Before shopping for a loan to restructure this debt, you should speak with his bankruptcy attorney about whether this is a good idea. You're taking on a burden that you had agreed to share with your husband. Taking it on yourself may be doing no one a favor. You can shop personal loans on Bankrate.

Get a copy of your credit score through one of the credit bureaus and see how his bankruptcy has affected your credit. Bankrate's link to myFICO.com can provide you with your choice of credit reports and scores from the three major credit bureaus.

-- Posted: Dec. 31, 2003
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See Also
How to handle lousy credit
Debt and marriage: a dangerous mix
Financial advice glossary
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