QUESTION: How can I protect myselffinancially from a spouse who has run amok with credit cards that Ididn't even know about -- some of which are in my name only? It seemsthat she mailed in preapproved credit card offers that were in my name.Now she has fallen behind with the payments and they are calling me(that's how I found out). Any advice would be greatly appreciated.
ANSWER: Wow. A call from a creditor isnot a great way to find out about debt you did not know you had. Notthat there is a great way. You are, unfortunately, not alone. Manyspouses are in the dark about their loved ones' credit card and otherfinancial habits. A few years ago I had a senior executive come to seeme for a similar problem. He had discovered that his wife had run up$180,000 in credit card debts without his knowledge. He found outbecause he was spending more time at home opening the mail since he wasdownsized and looking for a new job.
The first thing I would suggest is to shine some light on theproblem. Sit down with your spouse and find out just how bad thingsare. You heard from some creditors that were calling because of latepayments. For all you know, there could be many other creditors thatare owed that she has thus far been able to pay on time. Understandingwhy your sweetie stole your identity would be helpful from a marriagecounseling standpoint, but for the moment I suggest you stick with thefacts and get to the emotions later.
Once you have determined the scope of what is owed, look atyour resources and decide on the best plan of action to pay off thecredit balances. It sounds as if you and your spouse keep separatefinancial accounts. If that is the case, decide together how much eachof you is willing to pay each month to lower the balances. Next, get a commitment from your spouse that she will stopusing the cards. If it can be accomplished no other way, ask her togive you the cards so that she is not in possession of them and willnot be tempted to use them. Whether you should close all the accountsor not is your choice, since your name is on them. Before you do that,however, be sure to consider the effect on your credit score ofincreasing your debt-to-available-credit ratio. It's a measure used bylenders to determine your creditworthiness, and closing credit lines isnot a good idea when you're just about to take out a loan because itlowers your score. But if having open lines of credit would present toomuch of a temptation, it's far better to close them than worry about afew points on your credit score. Another important factor is to find out how and on what yourspouse spent the money charged on the cards. One devastating example ofa financial crisis that is often kept from a spouse is a problem withgambling. If your spouse's spending was the result of some form ofaddictive behavior, she may need to seek assistance to stop thedestructive pattern that has been established.
To protect yourself from future problems, communicate withyour spouse regularly about financial issues. Look for changes inbehavior that may indicate that she is misusing credit again. Anunwillingness to discuss financial matters, unexplained purchases orunusual attention paid to when mail arrives at home may be signs oftrouble. You may also want to sign up for a credit monitoring servicewith the credit bureaus. Anytime there is a change in your creditreport, such as a newly opened credit card account, you will benotified. From a purely legal perspective, you may want to contact anattorney to ascertain whether you are truly responsible for the debt inyour name. If your spouse forged your signature on preapproved cardapplications, the debt may not be collectible. There may be legalimplications for your spouse, however, so that's a choice you will haveto weigh carefully. Good luck! Bankrate.comis the Web's leading aggregator of information on financial productsincluding mortgages, credit cards, new and used automobile loans, moneymarket accounts, certificates of deposit, checking and ATM fees, homeequity loans and online banking fees. Visit Bankrate.comto get the tools and information that can help you make the bestfinancial decisions.
Source: Money & Work
