Divorce and Credit Card Debt

When a marriage comes to an end, it’s always a tragedy.  Of course the rending of the family unit and the difficulty for the kids is the hardest thing about separating at divorce.  But the difficulty of separating one house into two can be difficult and tedious to say the least.  You have to go from one checking account to two, two homes instead of one and separate accounts for everything from credit cards to utilities.

The is an additional overhead to how to handle a divorce situation if in addition to splitting your assets, credit card debt that may have been a part of the shared family financial picture also must be split up.  To the credit card company, that family credit card is the property of that shared entity which was the marriage.  So when the union splits up, the transition from a financial point of view of your accounts separating is not over night.

So one of the many issues to be discussed and a plan made for is how to separate that credit card debt.  Whoever continues to hold the family accounts will continue to get those bills and be expected to pay them.  Now the least preferable way to handle the debt is to build the payments into any forced settlement agreement such as child support.  So at the time the divorce is final, the amount of the debt and the payments that must be made could be calculated and half of that put into the amount that the income generating partner must provide.

But that leaves the management of those credit card debts to one partner and the other one just has to pay a set amount.  And if the credit cards get used by either partner, that legal amount would have to constantly be changed and that would prove to be a constant headache of administration.

If the divorce is a shared responsibility so each spouse can work with the other to adjust the financial picture in an advantageous way, then how to separate the credit card debt should be part of that planning.  Part of that planning is how to use shared assets to pay down that debt.  You may have a home that will be sold, retirement accounts or other assets that were set aside for the future of the marriage.  Before you sell those things,   close those accounts and distribute the funds, look at using the outcome to retire that shared debt.

But it’s likely some of that debt load will live on past the divorce.  In those cases splitting into two individual accounts may be the way to go.  In that way, if the family was carrying $10,000 in debt, if each marriage partner walks away with $5000 of the debt, that is at least fair and equitable and how each individual handles that debt is up to them.

There are two ways you can go about splitting the credit card debt.  If the debt is with a carrier with whom you can negotiate and conduct a dialog, getting a meeting or having a conference call with the managers there would be productive.  The credit card company would far rather negotiate with you how to handle this debt load then deal with it

Credit Card Debt and Avoiding It

In this modern time where the economy has been such a challenge for everyday people like you and me to keep up, it’s easy to get into credit trouble when your credit bills begin to stack up. So if you are in the position to just start learning the ropes of the world of credit cards, there are a lot of things you can do to avoid credit card debt before it sneaks up on you and keep your nose clean, as they say.

This is an outstanding goal for you if you are just getting your first credit cards. If you know or talk to anyone who is battling tens of thousands of dollars of credit card debt, you know what a jail sentence it can be. Once that credit card debt gets that high, the time it will take even under the best of conditions to bring it down runs into the years if not decades. And for all that time, thousands of dollars of money goes down the drain to credit interest that doesn’t buy you any food, tickets to the movies or new clothes. It just goes away with no value to you at all.

But if you are new to the world of credit, getting a credit card is a good thing. But once you get one, keeping it under control is job one. You will find it amazingly easy to use a credit card once it comes. In fact, the retail world makes it difficult to conduct transactions any other way. You can pay for gas at the pump that way and even charge your groceries at the grocery store. And while all of these great uses for credit are helpful, you can end up with a whopper of a credit card bill at the end of the month. And if you don’t pay that bill off, that is the first step on a lifelong jail term in credit card debt jail.

So there are some guidelines you should follow to both use credit responsibly but also to keep building your credit rating which has a real value to you. Remember that what the credit card companies don’t tell you is that making a charge on a credit card is a loan. Even if you just charge ten bucks to go to the movies, you took out an unsecured loan to finance that movie ticket.

So once you start using a credit card, keep in mind that you will be paying back everything you run up on it. It is NOT free money. A good practice is to save every receipt every month and keep a running tally of what you have spent on credit. Now only can you use that to cross check your credit card, it keeps you honest because each time you add a charge to your credit card, you can update your tally so you know for certain that you will be able to pay it off when the bill comes.

Paying off the credit card each month is the number one best way to keep your credit problems under control. Now it isn’t a bad idea to let a little bit of the debt drift from month to month. This builds your credit history and credit rating which will pay you well down the road when you want to buy a larger purchase. But by staying on top of your credit and what is going onto your card, you will start out with the kind of habits that will lead to a life of good credit use without credit card jail. And that is a wonderful gift to give yourself early in life.

Bad Credit Credit Cards and Their Fees

Are bad credit credit cards worth the extra fees?

In light of tougher restrictions and stricter guidelines for acquiring regular credit cards, many consumers with poor credit are being forced to use alternate credit cards, such as secured credit cards. While these cards do come with more fees and higher interest rates, they can be beneficial when used properly because they can help you to raise your overall credit score and help you to repair your bad credit.

What you should understand about bad credit credit cards is that the best way to use them is as tools to improve your poor credit score. They should not be used as emergency cash, or to pay for something that you otherwise cannot afford, for instance. Even if you have to pay a hefty enrollment fee and high interest rates, you can still get several benefits out of owning a credit card designed for those with poor credit histories.

By maintaining a balance that you can pay off every month, you will not be caught-up in the accrued interest cycle, which is a significant problem for many consumers who spend more than they can afford to pay. When the interest is added in, this can make the difference between a timely payment, a late payment, and defaulting on your credit card payment altogether. Paying your credit card balance in full each month shows lenders that you are not overspending, and this will result in a positive marks on your credit report, month after month.

However, if you continually use your credit card to the point of where you cannot afford to pay off the principal and the interest each month, this will cause you even more problems in the not-too-distant future. Just like on-time payments will be reported to credit agencies, so will late payments and defaulted credit card accounts. Even though the extra fees associated with bad credit credit cards can be worth the extra fees, this is only if you do not dig yourself into a deeper hole using them.

In this economy where lenders are not quite as giving, or forgiving, with credit, it is especially important to keep your payments to a manageable level. Bad credit credit cards can be an exceptionally valuable resource for those who use them correctly, but they can also be the final nail in the coffin, so to speak, for your credit history if you abuse the privileged of having any amount of credit extended to you.