You have great credit, and, after they file for bankruptcy, your future spouse will have a clean slate. Many marriages end as a result of financial disagreements and poor financial decision-making. When you marry someone who has declared bankruptcy, it won’t immediately affect or damage your credit score, or render you unable to secure certain loans, but it could complicate your financial health over time. Don’t be shy about sharing the details of your finances with your future spouse in order to avoid any surprises or misunderstandings. But before you walk down the aisle, there are a few things to know about how your future spouse declaring bankruptcy can affect you:
The best time for your future spouse to file for bankruptcy is before you are married. Doing this beforehand will increase your chances of obtaining new credit as a married couple. It will also give your future spouse more time to organize their finances before combining them with yours. They can start building their credit immediately after filing.
Each individual has their own credit report, and getting married or divorced does not combine or divide credit. As long as you do not share accounts, you and your spouses credit histories will remain separate. If you are marrying someone who has filed for bankruptcy, you will need to maintain separate bank accounts and credit facilities to be sure that your credit is not affected. Any joint accounts you have with you spouse can reflect their bad credit, and loan applications might carry low borrowing limits and high interest rates if your new spouse’s name is attached.
Start out by working with your spouse to help slowly improve their credit. After marriage, open a joint credit card for a limit under $500, so that you are not exposed to a huge liability but at the same time are using your good credit to help their bad credit. Monitor all payments to make sure they are made on time.
In order for the joint credit card to benefit your spouse’s credit, be sure that the lender will report the new credit line to all three credit bureaus (Experian, Equifax and TransUnion). After six months to one year, your spouse can try applying for a credit card in just their name from the same lender. It is easier to do it through the same lender because they have already been periodically checking both of your credit history throughout the year. Before applying however, make sure your spouse checks if they are eligible for an account in order to avoid a credit check that could make more of a dip in their credit.
When marrying someone who has declared bankruptcy, it can be difficult to permanently keep your credit histories completely separate. Large purchases, such as buying a home, usually require both names be on the mortgage so both incomes and credit histories can be considered in evaluating the risk of the loan. If you are applying for joint credit for a loan, list the person with the best credit first on the application.
No matter what your financial situation is, both partners should be open and honest about their debts and other troublesome financial situations. Discuss the options for filing for bankruptcy and talk to a qualified bankruptcy attorney at The Sampair Group for guidance along the way. Learning the facts about bankruptcy and how it can affect your marriage is important to ensure a lifetime of financial security.