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Repairing credit destroyed in a divorce

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Divorce and credit

Dear Dr. Don,
I was divorced in March. My ex-husband ran up the credit cards and left me in debt.

Since he had a good credit history and I had a good income, we held joint credit accounts. I was awarded everything in the divorce — mostly the debts.

We still have one joint credit card left that has a $6,200 balance. The credit card company will not take his name off the account because he was the main cardholder, nor will they let me open an individual account and transfer the balance. Meanwhile, my ex is nowhere to be found.

He recently opened an individual credit line and has an outstanding balance on the new account. Now I’ve been notified that the interest rate on our joint account is going to increase because he agreed when he originally applied for the joint account that he wouldn’t make payments to another creditor when doing so would cause him to default on the terms of this credit card.

Now I’m left paying the debts that he ran up before he ran off, and it’s going to take me even longer thanks to a higher interest rate caused by an outstanding debt of his that I have no control over.

I want to get an individual credit card and transfer the balance, ideally to a card with a lower interest rate, but the divorce bruised a fairly short credit history. I’m not trying to get out of paying this debt, I just want to make it more affordable, fix it so that what my ex does from now on won’t affect me, and work at rebuilding my own credit.

I don’t know if I’m looking at things the right way, or even if this is the best course of action. I’d appreciate any advice you can give me on the best way to get out of this dilemma.

Sam Stamina

Dear Sam,
Outstanding joint debts are one of the thorniest financial problems in a divorce. The divorce court may allocate your assets and debts, but it can’t force creditors to accept the division.

Creditors can agree to change joint accounts to individual accounts to accommodate account holders that are divorcing, but there’s no incentive for them to do so in your situation because of your past credit history.

Even with joint accounts, one person is considered to be the primary account holder. In your case it’s your ex-husband. The account will stay open as long as there is a balance on the account.

Because you’re not the primary account holder, you need to protect yourself against your ex continuing to use the account. Write a letter to the credit card company saying that you will not be responsible for any new charges made to the account as of a certain date after they have received your letter. Send the letter certified mail requesting a signature receipt to keep in your files along with a copy of the letter.

Since you’re not likely to qualify for a credit card with a low interest rate for balance transfers, and if you had the money to get a secured credit card that would pay off the $6,200 balance on the joint account you wouldn’t be writing in for advice, your best move is to pay down the balance on this card as quickly as possible.

Get a copy of your credit report and review it to make sure there aren’t any other problems waiting in the wings. Dispute any errors on your account.

Continue to make timely payments on all your bills. To build a credit history, you need credit in your own name. After reviewing your credit report, you should apply for one credit card.

If you belong to a credit union, their card is a good choice for that one application. You can also
shop cards on Bankrate but again, only apply for one card. If you are denied, then try for a secured card.

Credit applications are called credit inquiries on your credit report and they stay on your credit report for two years. You don’t want to apply for a lot of cards because multiple credit inquiries make you look desperate for credit and lenders avoid lending to desperate people.

Rebuilding your credit history will take some time, but you’ll be able to put all this behind you.