May 1, 2012
By: John Clark
If a potential spouse has previously filed for bankruptcy, and that bankruptcy has been discharged, the other partner should ask some questions before deciding to merge finances, according to a recent report from Fox Business.
In the article, the author offers advice to a woman who is planning to marry a man who had a bankruptcy discharged a few months ago. In the bankruptcy, the man had to give up his house, but the proceeding otherwise went clearly, and the case was discharged without further hassle.
First, the author cautions the woman that she should be somewhat concerned about how her future husband’s credit rating will affect her own. After bankruptcy, filers’ credit may suffer a temporary setback, although this may be reversed with sound financial management.
The author suggests that the spouse who hasn’t filed for bankruptcy should keep her finances separate from the other spouse, and not place his name on her bank accounts until his credit score has recovered.
And, after marrying a person with a recent bankruptcy on the books, the non-filing partner should help him try to improve his credit. One method to make this possible is to open a joint credit card with a very low spending limit.
Under this strategy, the partner with the low credit score can take advantage of the other spouse’s positive rating to begin building a strong credit score of his own. In addition, by opening a credit card with a low monthly limit, the other spouse will minimize her financial risk of accruing credit card debt.
Of course, both spouses should make sure to report the new credit line to the three major credit bureaus, Experian, Equifax and Transunion. If a person improves his credit rating, and no one is around to hear it, it doesn’t really exist.
According to the Fox Business report, after six to 12 months of consistent payments on this jointly held card, the spouse with the lower credit rating could try to open his own credit card from the same lender.
In summary, couples who are engaged may not need to be overly concerned about the past bankruptcy filing of their spouse-to-be, but they should be open and honest about their past financial troubles, and take pragmatic steps to improve their credit rating after bankruptcy.
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