Debt Relief for Families and Couples
Do not put both of you into a plan if the debt is mostly in one name, and you haven't yet fallen behind.
Look at Each Person Separately
Settlement, credit counseling, a hardship plan, and bankruptcy all should have the same first question: who actually owes the debt?
If one of you still has clean credit, and the balances are mostly in the other name, keeping that clean file intact is often a wiser choice than enrolling both people.
Sort the Accounts
- How much of the debt is joint — is the overall debt still lopsided?
- How much of the overall debt is only in one name — is it a majority of the problem?
- Is the other person only an authorized user?
- If one of you stays out, are the payments comfortably affordable?
An authorized user is not the borrower. Removing them from the account can absolutely be done.
A joint account is different. If the account is not yet delinquent and you want to protect your spouse from credit damage, do not include joint accounts. If the joint accounts are already behind, the damage is already done to you both, and this consideration likely no longer applies.
If $50,000 of the accounts are just in one name and $10,000 is in the other, do not pull the smaller file into a settlement, bankruptcy, or credit counseling just because you share a household. Negotiate the large file. Leave the small one alone.
Common Questions
Do both spouses have to be in a debt settlement?
No. If the debt is lopsided and still current, but about to fall behind, settle the accounts in the name of the person who owes the most. Leave a joint account out if it is still current and you want to protect the other spouse’s credit. An authorized user does not owe the card. Remove that spouse before you settle it, so the settlement is less likely to show on their report. Do not pull a spouse with clean credit into a plan just because you share a household.
Does a spouse’s charge-off show on your credit report?
Not just because you are married. It shows up if you are a joint borrower on that account, or when you apply for credit together. An authorized user is not liable for the account and can be removed from a credit report.
Do both spouses have to be in credit counseling?
No. The advice is the same as for debt settlement. If the debt is lopsided and still current, enroll the accounts in the name of the person who owes the most. Leave joint accounts out. An authorized user does not owe the card. Remove that spouse before you enroll it, so the counseling is less likely to show on their report. Do not pull a spouse with clean credit into a plan just because you share a household.
Not sure how to handle joint accounts?
Read the free series first, or have Jared look at the accounts with you.