How To Eliminate Credit Card Debt Problems During Divorce
Divorce brings with it many problems to be resolved. During the divorce process, finance usually plays a leading role, and included under the finance umbrella you will find, of course, credit card debt. While often it is both the husband and wife who have been receiving the benefits of credit card expenditure, it is likely that the credit cards will be in the name of one party or the other. If both husband and wife co-operate over the balances, credit card debt is less of a problem than it might otherwise be. However, if the cards are in the name of the wife, and the husband denies all knowledge of credit card expenditure (or vice versa), then the outstanding credit card debt could well land in the lap of the cardholder.
The article below covers credit card debt after divorce in a bit more detail.
Don’t Let Divorce Ruin Your Good Credit Rating!
It is a common story: "In 2001, I divorced my husband. Of course, we had the normal splitting of property and assets. This included a debate regarding our credit card debt. Although, we were married for 10 years and did use the credit cards as a couple, only my name was on the credit cards. As the divorce was going through, my soon to be ex-husband’s recollection faded....of shopping sprees, vacations, and meals at top restaurants that we enjoyed. Sadly, it was my responsibility to pay for the memories that we had created. Ad all those charges were spread over several high interest credit cards."
This is a common situation, so if you find yourself in a similar situation, you are far from alone. In recent years, experts have detected a 20 percent rise in filings for bankruptcy, and it is estimated that much of this increase is due to divorce.
If you find yourself in this situation after a divorce, you will have several options to eliminate the credit card debt problem. Be warned, though, as some options affect your credit report for a long time. You could file for bankruptcy too, but you should be aware that if you choose this option, the bad mark will stay on your credit report for ten years if you are in the US. Other countries have similar laws and regulations. Another option would be to simply make the payments. However, many people, after experiencing a divorce, find that living on one income is a very difficult adjustment to make, and are forced to only make the minimum payments on their credit cards. That means they can be paying a lot of interest on their credit card debt. For example, if you had a credit card debt of $25,000 at an average interest rate of 18%, it would be thirty-two years before you paid it off! You would be paying for those memories decades ahead! That is a very slow pace to eliminate your credit card debt problem.
Another option is to seek professional help. There are several non-profit organizations, in the US, that help with debt problems, and many people seek this type of help following a divorce. This is how it would work for you. You will pay a small fee of around $14.00 per month, and they will analyze your credit card debt, living expenses and income in order to determine what type of repayment structure would best work for you. They would then contact your creditors, and work with them regarding interest rates, late fees, and payment amounts. The credit card companies, who understand that divorce is one of the leading causes for bankruptcy, usually don’t have a problem working with the credit repair company. After all, they want their money!
Although, the non-profit agencies do not report credit counseling to credit bureaus, most credit card companies do. You may look at this as a negative, but many people don’t. Credit counseling can be explained a lot more easily than bankruptcy, which can often prevent someone trying to buy a home, or even purchase a car. It is understandable that you should seek credit counselling after divorce, so credit companies are more likely to take a realistic view of it, without penalising you in a draconian way.
When you are enrolled in a credit counselling program, you will not be allowed to retain a credit card. However, you may find that can be a relief. As you cut up all your plastic cards, try to relish the fact that you are about to eliminate your credit card debt problem. You are starting a new life after your divorce, and this can be part of your renewal. After all, you don't really need credit cards. They are far too expensive anyway.