Family: Divorce and Credit Accounts
Authored By: Legal Aid of North Carolina
If you have recently been through a divorce or are contemplating divorce you may need to make changes in your credit accounts.
There are two types of credit accounts: Individual and Joint.
Individual Account: +
An individual account is provided relying only on the applicant’s income, assets and credit history.
Whether married or single, you alone are responsible for paying off the debt of your individual account.
There may be authorized users other than you using an individual account.
When you have an individual account no one else can affect your credit record.
Joint Account: +
In a joint account the income, assets and credit history of both spouses are taken into consideration. In a joint account each spouse is legally responsible to the creditor for the entire debt.
No matter who actually pays the household bills, both spouses are responsible for any debt that is on a joint account.
Authorized Users on Your Account: +
If you open an individual account or a joint account you may authorize another person to use that account.
You are responsible for paying any debt incurred on your account by any authorized user.
In the event of divorce or separation you and your spouse are responsible for any debts on any joint accounts.
If You are Contemplating Divorce or Separation: +
It is important to make regular payments on any joint account.
You may ask the creditor and close any joint account, or any accounts your former spouse was a user on. This allows you to avoid further use of the credit account.
A creditor cannot close an account because of a change in marital status, but can close an account at the request of all the account holders or in accord with the agreement.
In the case of a mortgage or home equity loan a lender will likely require refinancing to remove a spouse from a loan.