In the past decade, Americans have racked up a prodigious amount of debt and it is fairly common for clients in divorce to not really understand how their debt is structured. Was the U.S. Airways VISA joint or husbands with wife designated as an authorized user? When trying to disentangle a couple’s financial relationship it is important for lawyers to know these things. Credit cards are also a fertile ground for fraud. We have seen several instances where a spouse without access to his/her own credit, applied for a card or credit line on behalf of their mate without the inconvenience of telling him/her. Of course, chances are excellent that you won’t have to pay for a credit fraudulently obtained on your behalf but that is often a laborious and complicated process.
Mortgages are complicated as well. What laypersons call a “mortgage” is actually two legal documents. When you borrow the money you sign a promissory note to repay it. Then the lender asks you to sign a mortgage. The mortgage is a pledge that the lender has dibs on your house if you default in paying the note. What sometimes occurs is that one spouse has bad credit. The lender will lend but only to the spouse with good credit. Meanwhile, if the house is to be jointly titled, the lender wants both owners to promise that the lender has a secured interest in the house. The “mortgage” is the instrument that provides that security. So, if Wife has good credit and Husband has no credit or bad credit, the lender will have Wife only sign the note but both spouses sign the mortgage. This means that Husband has no obligation to pay the note but if Wife fails to pay, the lender can foreclose on the house and Husband has no right to object.
If you are going through a divorce, order a credit report from Equifax, TransUnion or Experian. Federal law requires credit agencies to give you a free report once per year. It won’t reveal your credit score (that you will pay for) but it does show you what the credit information compilers think you have out there in the world of debt. Study what you get and if things look wrong, it may be time to call the lawyer. Note there are many subscription services that will monitor you for a fee. That is a different animal than the report itself.