Help! My Spouse is Ruining our Credit!
If someone were to write a comprehensive book on why marriages break up, chances are, the number one cause would be the almighty dollar. As happens so often in marriages, you have one wage earner and one home maker, or even if both parties work, chances are, there is a huge discrepancy in their take home pay. More and more these days, the person making all the money is the woman, with the husband playing the roll of Mr. Mom. Regardless of who is filling what role, most fights between couples start because of money and when one spouse is not watching their spending while the other one is trying to earn the money, well, marriages have been ended for far less.
But what if you want to work it out instead of burning your bridge? Financial problems are exactly that, problems, but they can be worked through together and, for some people, spending is a sickness akin to alcoholism or other such conditions. With proper counseling and treatment, a shopaholic can be taught that their behavior isn’t acceptable.
So, where to start? The first step should be the establishment of clear and easy to understand communication. Sit down and talk to your spouse and see if they understand that their spending habits are out of line. Show your spouse the family budget and point out how damaging their habits are to your families’ financial security and try to gauge their reaction. If there is remorse and a commitment to do better, than you are already on the right track. The real problem arises when the spouse believes that it is their right to have the spending habits they do or that it is a compulsion they can’t control. If you want to avoid divorce, and if you are already in dire financial straits, divorce is about the worst thing you can go through, you can try to separate your credit from your spouses so that their irresponsible spending habits don’t ruin the both of you.
The first thing to do is to figure out if you live in what is known as a community property states. Nine different states fall under this banner and if you do live in one of them, you are pretty much out of luck. What is your property becomes the property of both of you once you get married, and that applies to debt, as well. If you do live in one of these states, it is probably time to either go see a marriage counselor or a lawyer to see what your remaining options are.
If you don’t live in a community property state, request copies of all three major credit bureau reports to see where you stand currently, what your credit score is and what you can do to improve your credit score in a hurry. Paying off your highest credit line fast can boost your score quickly.
While it will damage your credit score in the short-term, send a letter to all of your credit card accounts that are jointly shared with your spouse and close them. If you are an authorized user on your spouses card or vice versa, you can simply have yourself removed from the card so that any transactions that happen on that card do not become your problem.
When you have decided to remove your name from any jointly shared card accounts, or if you have simply decided to close them all out, you will need to do the same with your bank accounts. Most people don’t realize that overdrafts on your checking account can have the same essential effect on your credit as missing payments on your credit card. Most banks have a set number of overdrafts a customer can have in a 30, 60 or yearlong period before they start reporting the problems to your credit bureau. Once they do, you can bet that your credit score will spin down the drain. Your bank can end up closing your account, and you may find it next to impossible to open an account with anyone else. While this is an extreme example of what can happen, if you have an overspending spouse who has a complete disregard for common financial sense, it might be closer to a reality than you think.
The next step would be to see a lawyer about completing the financial separation process. The problem here is that every state has different rules about how this process can be done. If you live in a community property state, it is almost impossible, while other states make it much easier. The only way to know for sure and the only way to truly protect yourself is by seeing a legal expert who has your state’s rules memorized. Of course, you’ll want to try to do this process together with your spouse since that would make it much, much easier, but if he or she doesn’t want the embarrassment of going to a lawyer and admitting they have a spending problem, even for the sake of you and your families’ financial well-being, then it might be time to consider the nuclear option: divorce.
The final step is going to seem a lot like the first one. Now that your finances are separated, you want to do everything you can to make sure you don’t end up the same way. If you have a spouse who has a complete disregard for financial matters, there is a serious problem with your marriage. Seek counseling to find out what the problem is. It may turn out that in the long run, you would be better off with divorce after all. It is not a reality some people want to have to face, but that’s just the way it is.
Divorce can be one of the most catastrophic financial situations one can find themselves in. It isn’t just the cost of the lawyers or the time spent filing paperwork, it is losing half of your assets and the possible financial burden of paying alimony. If your divorce is a long and drawn out one with a bitter and angry ex, a divorce can be a disaster. You should only really consider it as a last resort, but if your partner hasn’t left you with any options, then you need to look out for your own financial well being and the well being of your children. It is a situation no one ever wants to find themselves in, but your credit will follow you the rest of your life and seriously impact every financial decision you make. You need to take care of it, even in the toughest of times.