Advantage Denton

August 9, 2010

Breaking Up & Breaking Out Finances (etc)

Filed under: Melissa Denton Posts — Tags: , , , , , — Melissa Denton @ 11:15 pm

Melissa DentonI recently had it brought home to me in vivid color that not every lawyer gives some essential advice to new clients who are going through a break-up of their relationship. Suzie (not real name) has already spent six months of divorce proceedings as the client of another lawyer who had done some business transaction work for family members. Suzie has been very frustrated. She feels that her attorney allowed the other lawyer to waste a lot of time and money writing nasty letters to her attorney that hurt her feelings and accomplished nothing.

Suzie told me about the income that she and her husband have, about the property they have accumulated, and about the debts. It was surprising to me when she said that her husband had run up the debt a lot more on their credit cards after she left the home and family business.

As I told Suzie, when you have a marriage or partnership (personal or business) and that relationship is ending, it is time IMMEDIATELY to calmly and kindly arrange your business affairs so that the two former partners are no longer able to incur additional debt for which the other person will be liable. The relationships with external creditors which were formed when you were together are not suddenly or automatically altered because partners/spouses separated or filed legal papers to dissolve their relationship.

Sometimes, circumstances exist where it is appropriate to keep a credit card or line of credit open and available to the other person, but most of the time it is a very smart and appropriate idea to inform creditors – by certified mail, keep a copy – that the account must be split out into two names or closed as to all future extensions of credit. This goes for household bills, credit cards, cell phone bills, lines of credit and any other way that two former partners had authority to incur debt in the other person’s name. The former partner should always be informed in a timely way so that they can make arrangements to get credit or service in their name to avoid interruptions in service or embarrassment upon rejection of a credit card. This notification does not remove responsibility for past debt, but should halt future unauthorized debt being incurred.

In our state, divorce law will make Suzie’s husband responsible for the debt he ran up after separation. Suzie, however, is at risk of these creditors coming after her if he fails to pay. Her credit will be harmed if he pays late. It would have been much better if he had not had her name on the debts he has been incurring while divorce has been going on.

A couple of other things to be aware of when going through a separation are: 1. It is important to get the right lawyer for your needs. Advantage Denton searches for and finds the right lawyer for you. Have us find the right lawyer for you. and 2. Be sure that you change passwords to voice mail, email, and other bank/business/internet accounts so that each of the former partners has their privacy. If there are ill feelings and concerns about possible mischief, it does not hurt anything to put passwords on utility accounts and the like so that no one cuts off your electricity.

Powered by WordPress