Divorce doesn’t end your debt with ex

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Dear Debt Adviser,
My fiancee and I just got our credit reports and are planning on buying a house. To her surprise, her ex still had not taken her name off an account with a $9,000 balance and is using (another) card that is in her name only. They have been divorced for nine years! Help!
— Ted

Dear Ted,
Divorcing a spouse is sometimes much less complicated than separating the former couple’s finances. When a married couple signs a joint credit agreement, the contract remains valid even if the couple divorces. The lender is making a loan to two individuals, not a couple. Whether you become single, married, divorced, widowed, a life partner or a life enemy, it makes no difference to the creditor. To completely separate finances, joint accounts must be paid off and closed or the balance transferred to a different individually held account.

Many divorcing couples make the mistake of believing that their divorce decrees stating one spouse is responsible for debt A and the other spouse is responsible for debt B relieves them of financial responsibility for the debt not assigned to them. If the account was a joint account, it does not. If your fiancee’s name is on the contract as a joint account owner, she and the ex are each fully responsible for all the debt. The lawyers like to call this joint and separate liability. I call it stuck from here to Sunday! As for the divorce decree, it could be used to take the former spouse to court to force him to abide by the agreements concerning debts, but it won’t help with the creditor otherwise.

The account with the $9,000 balance sounds like it may be an account where your fiancee is an authorized user and not a joint account holder. As an authorized user, the account will be factored into her credit score and will appear on her credit report but she will not be responsible for repaying any debts incurred. There was a brief period when the FICO score did not include authorized users due to some shenanigans with people selling authorized user status to fake a higher score. This apparently has been handled otherwise by the elves at FICO score creator Fair Isaac Corp., so authorized users count in the scoring again.

Typically, the name of an authorized user has to be removed by the owner of the account. Your fiancee may not have the kind of relationship with her ex where she could simply call and ask him to remove her name from the account, and he would comply. If that is the case, she could file a “not mine” dispute for the account with the credit bureau that is reporting it. Keep in mind that it will take 30 days from the time you file the dispute for the credit bureau to act. So if the account is removed, her credit report will not reflect the change right away.

I’m not sure how the ex is able to continue using a credit card account that is in your fiancee’s name only, but she will need to put a stop to that right away. Call the creditor and close the account. To be fair, she might give her ex a heads up that she has closed the account to save him any embarrassment from trying to use the card when it is no longer an active account. Unfortunately, if there is a balance on the account, she may end up having to pay it to avoid causing damage to her credit.

Checking your credit report is a great idea for everyone, and I recommend that you do it at least once a year and when you are anticipating a big event, like a marriage or large credit purchase. You can get a free copy from each of the three bureaus at www.annualcreditreport.com. If you are just monitoring your report and don’t suspect anything surprising, I suggest you get one of the three reports every four months. That way you will have more current information on a regular basis and you may spot a “surprise” sooner.

Good luck!