| Ask Dr. Don
Today, Dr. Don answers questions
about joint credit after a divorce and student loans on credit reports.
Divorce and credit
Dear Dr. Don,
My soon-to-be ex abused credit cards during our marriage (part of
the reason for our divorce), including transferring balances to
lower interest rate cards under my name. Because we live in a community
property state, he is trying to stick me with half the liabilities.
Because he was the breadwinner in the family (married 17 years),
I know I will not be able to earn enough to pay these debts. He
had a card in his name on all these accounts. Do you have any advice
on how to handle the credit card companies? It's my understanding
I cannot contest the status of any of these accounts until the divorce
is final, i.e. debt consolidation or bankruptcy. I cannot afford
You say in your letter that you can't afford a lawyer. Remember
that this column doesn't provide legal advice and we'll move forward
from there. Credit card accounts opened during a marriage are almost
always joint accounts. In joint property states, accounts opened
during the marriage may automatically be the responsibility of both
husband and wife, even if only one applies for the account. Unless
they agree to a change, your creditors will continue to consider
these joint liabilities even after a divorce.
Creditors will have differing policies regarding
divorcing couples and joint accounts. You need to contact all of
your creditors to discuss how they may be willing to assign ongoing
liability for the account. Ask them to transfer your joint debt
to the name of the person who will be responsible.
Close or cancel as many of the accounts as possible.
Even if your name is taken off the account and the account is closed
to future charges, you may still have a legal responsibility to
pay existing balances. Inform all creditors, in writing, that you
are not responsible for debts incurred after a specific date. Keep
a copy of the letter for your records and send the original via
I used an Experian publication, Divorce
and your credit, in preparing this response. It's recommended
reading along with Divorce
and credit: Be sure you know the rules of the game.
Student loans on credit reports
Dear Dr. Don,
Can you tell me if a lender of a student loan can place the outstanding
debt on the borrower's credit report if the borrower is still in
school and has taken all steps to defer the loans? I am attempting
to buy a car, and without my student loan debt my beacon score is
over 700 but after factoring in my deferred loan (deferred until
5/2002) the score goes down to 514! Should I assume that I'd be
living in a grass hut for the next 30 years?
Yes, a lender can place your student loan on your credit report,
even if the loan is in deferment. A credit report provides lenders
with your payment history, your outstanding debt, and your credit
lines, among other things. Your student loan is a claim on your
future income, just like any other debt. Creditors need to be aware
that this obligation exists. Deferred student loans should show
up on your credit report as being current, with an explanation line
stating that the loan is in deferment. If you have been denied credit
in the last 60 days, you can get a free copy of your credit report.
site's link library to contact the credit bureaus. Don't despair.
The idea is to graduate, start making a decent income and then be
able to afford the accoutrements of a successful life.
Bankrate.com writers base
their answers on our editorial content and advice of financial professionals.
We make no claims or representations about the accuracy, timeliness or completeness
of such content, advice or the answers provided to you. Our content, advice
and answers are intended only to assist you with your financial decisions. However,
by its nature such information is broad in scope. Your financial situation is
unique, and our content, advice and answers may not be appropriate for your
situation. Accordingly, we recommend that you get different opinions and seek
the advice of your accountant and other financial advisers before making any
final decisions or implementing any financial or investment strategy.
-- Posted: July 28, 2000