How your credit card bills and credit reports can impact your spouse.
I talked to you about 30 Days ago and you were very helpful. I have a couple more questions.
How does my personal credit card debt affect my wife?
If I have credit cards in my name and business does that change anything as far as unsecured debt?
Can I prevent my credit card debts from impacting my spouse?
There are varying degrees of how your spouse can be impacted by your credit card bills. Because of the variables, much of my feedback in this area is going to be situational, and unique to each person and their goals. When you add in business credit card accounts, your situation can take a different turn when you weigh the goals you have for it.
I will be better able to provide more than the general feedback below (that is relative to most married couples) when you post answers to my questions in the comment box below.
Debt problems with your spouse as an authorized user on your credit cards.
It is not uncommon for many of us to carry the credit card of our spouse. Our children may even have a credit card of ours that they can use. They are not co applicants or signatory to the credit contract, so not on the hook for payments per say. But as an authorized user, the account could be showing up on their individual credit reports, just like on our own.
When our household finances are in good shape, having authorized users on an account or two is not a problem. But that changes rapidly if we miss or stop making payments. The situation can deteriorate further when you look at your options for getting relief from problem credit card debt.
If you are faced with some tough financial decisions where some or all of your credit cards are not going to be paid on time, it will often be best to get any authorized users removed from your account before you:
- Enroll in a debt management plan with a nonprofit credit counseling company where your credit card accounts will closed by the credit grantor.
- Stop making credit card payments with the intention to later settle the balances for less, which typically requires you be late with many months of payments, that can then damage the credit of your spouse, child, or other authorized users. You can sometimes plan for, or pick accounts you choose to settle.
- Decide to file for bankruptcy protection with or without your spouse. Even if filing bankruptcy jointly, and given the choice, I would remove authorized users from my credit cards (especially non spouse card holders).
Also consider that your credit card balance limits can skew your credit utilization to be viewed poorly, which can impact authorized users, even though you are not having trouble making the payments. It is a good idea to keep utilization (the difference between your credit limit, and the balance owed on the credit card at any given time), under 30 percent. Less than ten percent would be even better.
Other ways your spouse can be impacted by your credit cards.
If you are going to work toward settling your credit card debts, there are several ways your wife can be impacted. Here are a few:
- If you live in a community property state and the debt was incurred after your marriage, your spouse could be impacted by collection lawsuits.
- Depending on how long it takes to settle the credit cards, you both could end up answering an untold number of collection calls, which have a knack for occurring at inconvenient times.
- Opening your mail box, which will see a fair share of collection notices, can become a bit depressing for a spouse.
How your spouse will be impacted will depend on the decisions you make about dealing with the debts. If you are being proactive and talking with each other about the situation, aware of all of the potential issues, and reaching your decisions together, you should be fine.
It would be helpful to know what your goals for debt relief are, as well as your credit and finance goals as a family looking forward 3 years. I can often be more direct with my feedback when I know who you owe, how much, and when you last paid.
It would be good to know the outline of your business accounts too, and whether the business is going to continue or wind down.