The Kitchen Table

Joint accounts can create credit problems long after a marriage ends, and although your Ex-spouse was ordered to pay the bill in the divorce decree, they aren’t and your credit is suffering. Now what? The first thing to understand is that you don’t “divorce your debt”. Lenders are not party to your Iowa divorce. It is important to know that a divorce decree does not override any agreement or obligation you have with a creditor.

For example, if an Iowa district judge rules that your Ex is responsible for a car loan that is in both of your names, that alters your obligation to each other, but it does not alter anyone’s obligation to the creditor. Consequently, if your Ex does not make the car payment as required, then the lender can still pursue collection action against not just your Ex, but you as well, regardless of which spouse is ordered to pay by the judge. If the payments are missed or not made at all the credit of all parties listed on the loan will be affected.

When it comes to a secured account, like an auto loan, your best option is to sell the asset. This way the account is paid off and your name is no longer attached to the loan. The next best option is to refinance any joint loans into individual accounts. However, this is only an option if you or your Ex can qualify for a loan on their own. Your last option is to keep both of your names on the loan. This is a risky option, because if you’re not the one making the payment, your credit is extremely vulnerable.

Talk to your divorce attorney to find out what can be done in terms of forcing your Ex to live up to the terms of the divorce decree. If he or she doesn’t have the assets to pay off the debt now, you may want to ask whether they can be required to make payments to your attorney, who can then make sure the payments are made. As long as the account remains unpaid, or paid slow, your credit will be damaged. A payment made 30 days late can lower your credit score anywhere from 75 to 110 points, so it's important to find a solution. 

*Employees of LPI Loans and our affiliates are not attorneys and LPI Loans DOES NOT provide any legal advice and users of this web site should consult with their own attorney for legal advice.