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Are you liable for your spouse’s debt?

Whether you are liable for your spouse’s debts depends on factors such as;  if you live in a common-law state or a community property state and what kind of debt it is. 

Common-Law State or a Community Property State

The IRS says most states operate under what is called common law. If a married couple opens a joint account or gets a shared credit card, they will both be responsible for paying back the debt.

In common law states, you’re usually only liable for credit card debt if the obligation is in your name. So, if the credit card is only in your spouse’s name, you’re typically not liable for that debt. Additionally, assets acquired by one member of a married couple are typically deemed to belong to that person, unless they were put in the names of both.

The laws are very different in America’s nine community property states, where the laws require that any property acquired, debt accumulated, and income earned during the marriage is the property or debt of each spouse.

What Kind of Debt is It?

In most states, you are not legally responsible for bills racked up before getting married. However, if you and your spouse open a joint account or get a shared credit card, you both will be responsible for paying back the debt.  Even if the spending was done solely by your spouse. 

Similarly, If you’re the cosigner on a loan for your spouse, your credit score will be hurt if your partner misses a payment. That’s because when you cosign for a loan, you’re signing on to be equally responsible for the debt. If they miss payments, the debtor could come after you for payments. The same situation applies if you and your spouse use a joint credit card.

In Common law states, property can be individually owned unless both names are on the contract. However, in community property states, assets and liabilities that either person acquires during the marriage become the joint property of both spouses. 

There are some exceptions for necessary joint household expenses. Debt that was racked up for things like child care, housing or food must be shared by both parties, even if a joint account was not created.

If you have any questions at all please call us at (800) 822-7120.

-Erik Kaplan

WHY DEBT COLLECTORS CAN NOW TEXT OR DM YOU!

A recent change in rules by the US Consumer Financial Protection Bureau (CFPB) allows debt collectors to contact you by direct message on social networks, email, or text message.

 

No one likes debt collector calls and emails or text messages most certainly will not be welcomed, especially when you have no debts to collect. You could block the number used for text messages, but whether it’s a scam text or a legitimate debt collector, they can always contact you from yet another phone number.

 

There is some good news here… the rules do require debt collectors to provide you a way to opt-out of further messages, whether from email, text message, or direct message. You might have to call or email the debt collector back in order to opt-out as they are not being mandated to have to provide that in text or social networks directly.

 

If you have any questions about this ruling or if THD Credit can be of assistance to you in anyway – call us at 800- 822-7120. We are here to help!

-Erik Kaplan

A Special 50% Discount for You

With the increase in consumer credit complaints – with issues ranging from credit report mistakes to problems related to debt collection, credit cards or mortgages, it is more important than ever to monitor your credit report.

According to the Federal Consumer Program U.S. PIRG, the number of complaints during the pandemic has surged by 86 percent.  In fact, the credit reporting complaints has been driven by nearly double the number of complaints about incorrect information on credit reports.

 

The accuracy of your credit reports is important because lenders determine how much to charge you for a loan or credit card based on a credit score derived from your report. In addition, if you are looking for work, potential employers might decide whether or not to hire you based on your credit report.

 

The best part of my job is helping people, and nothing makes me happier than helping someone qualify for a loan, get lower interest rates, an increased line of credit or a healthier credit standing.

 

If you or one of your clients, friends or family members need help with credit repair, in any way – please email me at erik@thdcreditconsulting.com  We would like to offer 50% off of our fees to anyone we can help during this challenging time.

-Erik Kaplan

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