By Sara Stout Ashcraft
BridgeTower Media Newswires
Those of us who practice matrimonial law are always dealing with debt. The required Statement of Net Worth has a section devoted to debt, including “chattel mortgages.” Today the biggest debt people have — other than (maybe) their mortgage — are usually on credit cards. I commonly tell clients to run a credit report on themselves. I point out their significant other usually has all the information needed to open a credit card in the client’s name without the client even realizing it.
The biggest concern is that if the opposing party ends up with a credit card on which your client is named as a debtor, there may well be big problems later. Joint credit cards have been the bane of divorce lawyers for years, as the debtors are jointly and severally liable. If the ex-spouse keeps a credit card on which the other is a joint debtor, uses it, and then fails to pay, VISA may soon be at the other’s door. It would be best if joint credit cards are paid off by the time the divorce becomes official. However, many times the parties do not have the funds to pay off a joint credit card, and that debt needs to be specifically noted and dealt with in the official separation/divorce paperwork.
Today joint credit cards are rarely issued — although ones issued years ago may be in service. While a credit card may have multiple “authorized users,” there is typically only one legally responsible debtor.
Evenn a non-debtor authorized user will usually have the debt show up on their credit reports. There are ways lawyers can help a client do to find out about issues up front.
Most consumersknow they are entitled to a free credit report from Equifax, Experian, and TransUnion once a year, but because of all the debt issues springing up from various sources during COVID, all three major reporting bureaus are offering free weekly credit reports though April 2022. The application to get the reports is available on annualcreditreport.com. This is the only official website that is set up by the “big three” reporting bureaus specifically to allow individuals to obtain their credit report. It also has easy to understand information about credit reports and credit in general.
Clients often say they “know” their credit is “good.” Unfortunately, many are often fairly ignorant of specifics. The various television commercials telling viewers they can check their credit rating whenever they want or even raise their credit score are not providing a detailed credit report, usually just giving the “credit score.” It is important for divorce clients to understand that detailed credit reports are very helpful and that their soon-to-be ex could right that moment be getting a credit card and hanging the debt on the spouse.
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Sara Stout Ashcraft is a partner in Ashcraft Franklin & Young, LLP. She concentrates her practice in the areas of matrimonial and family law
