For many spouses, sharing financial accounts is part of being married. In divorce, however, any unclosed joint accounts can cause trouble. That’s why I recommend being diligent in closing open joint accounts. Then following up with the financial institution to make sure your requests are carried out.
Here’s an example of a bad situation: A joint credit card account isn’t closed. One ex-spouse keeps using it and piles up debt. The other ex-spouse may not realize the account is active – they don’t see statements – but will be just as responsible for paying back the charges. (And may experience a dinged credit score for late payments they didn’t even know about).
As part of their divorce preparations, I advise my clients to create a complete list of joint accounts. It’s important to order your credit report to see all open accounts in case you have forgotten any. Credit reports will show names and authorized users, balances, and history of payments being reported to credit bureaus.
The importance of closing joint accounts, and hanging onto related paperwork, can be seen in what happened to one of my clients. She came to me after being sued by a credit card company. In her uncontested divorce, her ex-husband had agreed to pay their existing credit card balance and that she would not be responsible for further charges. When the divorce was final, she notified the credit card company and stipulated she would not be liable for any charges going forward.
Seven years later the company sued her. Her ex-husband had incurred substantial charges over those years and quit paying. So, the bank went after her. She couldn’t locate her original letter to the bank – it had been seven years – and apparently the card company had not followed her instructions. Fortunately, a bank employee helped locate documentation of her letter. We filed a motion that the lawsuit against her was baseless. The company’s attorneys argued against dismissal and a hearing was held. I’m glad to say we won. My client was awarded attorney’s fees, too. It might have been a different story without her letter to the bank, sent after her divorce.
What about other types of joint accounts? Married partners also share home mortgages, car loans, checking and savings accounts, stock brokerage accounts, and personal loans. How to remove your name, and all obligations, will depend on the type of loan or account. For example, the bank isn’t likely to take your name off a car loan or mortgage just because you asked. It’s likely the loans will have to be refinanced to change the original borrowers, so contact each financial institution to learn what is required.
The key is to know all your accounts – and apply follow-through to ensure there are no surprises later. Like being responsible for an ex-spouse’s credit card spending.
As part of your diligence, I recommend ordering credit reports again three months after your divorce is final. That way you’ll see whether your instructions to companies were carried out, names were removed, balances paid, and accounts closed.
Handling these matters will be important for rebuilding your new life and future.
The law office of Jeanne Coleman works on behalf of clients to achieve divorces that lead to a better life. We believe that divorce can include respect, resolution, and rebirth. To schedule a free, 20-minute consultation, call the law firm at (813) 253-2820. (Please note: a free, 20-minute consultation does not establish an attorney-client relationship.)
