pending divorce and creditors

jcs7September 9, 2006

If assets are frozen until a divorce settlement is reached, will credit card companies - if a lawyer makes such a request - ever put accounts "on hold" for 3 to 6 months? Don't laugh me off the forum ... you never know until you ask, right?

The couple own a business together, and a home. The husband has a lot of debt in his name - mostly marital and business debt, is currently not working, and is so unraveled by all of it that he has signed a power of attorney over to a family member. He is out of the picture for all intents and purposes. So, no assets will be liquidated to pay debts other than the mortgage until the house, going on the market tomorrow, is sold.

Any advice?

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I have worked for two credit card companies and have never seen them "freeze" an account.
If there are no payments coming in the accounts will conitnue to go past due while piling up late fees and at 6 months(180 days)will charge off.
At that point they will be reviewed for either litigation or to be sent to a collections agency.
If all of the debt is in the husbands name the only way the wife can be held responsible is if the court says she has to pay part of it. But the credit cards can't "force" her to pay since the debt is only in his name
If she has credit cards in her name she would best be advised to do what she can to make the minimum payment each month even if it means borrowing from family
That way she will at leat come out of this with her credit in good standing
Hope this helps

    Bookmark   September 9, 2006 at 7:12AM
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Creditors are not a party to the divorce, so payments must continue, regardless of anything going on between the divorcing spouses.

I disagree with Karla....marital debt is marital debt, no matter whose name is on it. If it was incurred during the marriage, the wife will be responsible if he doesn't pay. Because they own the business together, she will also most likely responsible for that.

Best advice: HIRE A LAWYER.

    Bookmark   September 16, 2006 at 11:14PM
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If you reread what I wrote you will see that I advised that if the credit cards are only in one persons name the credit card company can not hold the other person responsible, but a court can hold both parties responsible for "marital debt".
the problem is the credit card company can only force the cardholder to pay.
We ran into this many times at the credit card company I worked for. Card was in wifes name,court said husband had to pay. We could not contact husband for payment,the interesting thing is if the husband was not on the card and the credit card tried to contact him about the debt they would be violating the FDCPA laws of disclosure.
the only option was for the wife to go back to court and husband could be held in contempt.
A suggestion would be to have the spousal support increased to cover the payments or force the resonsible spouse to transfer the balance to one of their cards.

    Bookmark   September 17, 2006 at 6:14AM
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Karla, sorry ~ I did misread that. So while the cc companies and loan companies could not go after the non-signing spouse, she can still be assigned part of the debts in the divorce decree as part of the division of assets/debts.

    Bookmark   September 17, 2006 at 8:19AM
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I know weed it is a strange set-up.
I have seen joint accounts where the judge has assigned the debt to one spouse, but as far as the credit card company is concerned both are still responsible. Personally I would have a problem knowing my credit was at the "mercy" of another person and would insist on the debt being transfered to their name .
The one solution is to have one low limit card for household expenses and each spouse have a seperate card for personal expenses.
Another weird thing is if 2 people have a joint account one person can call up and close it and the other can call and reopen it.

    Bookmark   September 18, 2006 at 8:23AM
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