 Dear Dr. Don,
My in-laws are divorcing and they have separate
checking accounts along with an agreement of which financial
obligations each will be responsible for. If one of them files
for bankruptcy, can the other be held financially responsible
for the other's agreed-to obligation? One is now threatening
to either file for bankruptcy or have a motor home, which originally
was in both names, repossessed. How would each of these outcomes
affect the other person?
-- Darrell Dilemma
 Dear
Darrell,
An agreement that spells out who pays for what is typically
part of a divorce decree. Unfortunately, since the creditors
aren't a party to that decree, they aren't bound by its terms.
Joint credit or loan obligations in the marriage survive the
dissolution of the marriage.
That doesn't mean that the financial agreement
isn't binding. It's binding on your in-laws, and not keeping
to the terms of the agreement can be grounds for the wronged
party to win a deficiency judgment against the ex-spouse.
If one of your in-laws files for Chapter 7 bankruptcy,
the creditors will look to the other for payment on any joint
obligation. Since they share that credit history, the payment
history for any joint obligation will show up on both of their
credit reports.
Divorced couples have enough on their plate
trying to rebuild their lives without dealing with the additional
burden of rebuilding a credit history. They should ignore
the temptation of sticking the ex with the bills and instead
work on meeting those financial obligations.
The Federal Trade Commission's Facts for Consumers,
Credit and Divorce, provides a good overview of the issues they'll
face.
-- Posted: July 16, 2004
|
When
applying for credit cards with better terms, should I drop the old
cards so that I don't have too much available credit, or should I
keep them because of the age of the accounts? 
