In the cases of divorced couples, the existing legal landscape often leaves recently divorced couples with no remedy for false credit reporting. Misinformation often confuses people and leads them to make decisions based on false information.
Here are some common myths related to divorce and your credit that you should immediately disregard:
Myth #1: The dissolution of the marriage automatically terminates joint liability for debts
It is standard practice for the court to allocate debt between the two parties in a divorce. Many inexperienced attorneys may believe that this is the final solution; it is not.
The final judgement of divorce does not bind nonparties such as creditors, and because of this, these creditors may continue to seek payment from anyone responsible for the debt. This means that although, the judge said the debt is “allocated”, you could still be subject to debt collection calls because of accounts belonging to your spouse.
The Truth: Unless both parties in the divorce pay off and close all joint marital accounts, divorcing spouses often stay financially “married”.
Myth #2: False credit reporting can be fixed through the legal system
False information on your credit report cannot be “corrected” through existing legal procedures unless the debt collection company used misleading or unethical practices in reporting your debts. Additionally, the Fair Credit Reporting Act laws trump state laws, even in the cases where relief could possibly be asserted.
The Truth: Credit Reporting Agencies are not compelled to remove any false credit reporting items from your credit report due to improper divorce planning.
Myth #3: Credit bureaus and creditors are responsible for damages arising from false credit reporting
The major Credit Reporting Agencies have no obligation to cover any damages related to your false credit reporting errors stemming from your marital financial issues. The Fair Credit Reporting Act only protects consumers in situations where a Credit Reporting Agency has acted in a negligent manner and because of a consumer’s soon-to-be ex-spouse.
The Truth: You could suffer from irremediable consequences unless your credit reporting attorney can prove that the credit reporting errors were caused by unreasonable behavior by the credit bureau, not your ex-wife.
Myth #4: Consumers only need to dispute the false reporting to the creditor
The first logical recourse for consumers experiencing problems with marital debt issues is to contact the creditor directly. Courts often dismiss claims made directly with the creditor, because the Fair Credit Reporting act requires that consumers dispute credit reporting errors to the credit bureaus not the creditors. The Fair Credit Reporting Act actually provides creditors with immunity from civil suits arising from direct disputes from consumers unless, the consumer has first disputed with the credit reporting agency.
The Truth: The proper way to initiate legal action stemming from a false credit reporting item resulting from a marital situation is to first dispute with a credit bureau, then to the creditor.
Myth #5: Only jointly incurred debt follows spouses after divorce
Under some circumstances of the Equal Credit Opportunity Act, creditors must report the debts of both spouses if they are joint users of a credit account, even though the debt belongs to only one of them. This can happen in the cases of credit cards where one spouse is deemed an authorized user only. In many instances, these account will continue to follow both spouses, even after a divorce.
The Truth: If you are an authorized user on your soon-to-be-ex’s credit cards, you may still be subject to credit reporting on the account.
Myth #6: Identity theft is only done by criminals
Many identity thefts are done at the hands of former spouses who harbor ill will or feel cheated as a result of the divorce. Since your former spouse most likely has access to information like your birthday and Social Security Number, it is remarkably easy for them to steal your identity to spite you.
The Truth: Identity theft can be carried out at the hands of people that are, or once were, close to us.