Bankruptcy Facts, Repair Credit after Bankruptcy, Philip Tirone

I want to share with you a question I recently received about how to repair credit after bankruptcy. Actually, Stephanie wanted to know a few of the bankruptcy facts because she wanted to repair her ex-husband’s credit after her own bankruptcy.

While married, Josh co-signed on a car loan for Stephanie. Stephanie also added Josh as an authorized user to two of her credit card accounts.

The couple then divorced. Six months later, Stephanie started experiencing financial problems. She was late on her car payments, as well as her credit cards. Then Stephanie declared bankruptcy. Though the vehicle was not included in the bankruptcy, the credit cards were.

Unfortunately, Josh was still a co-signer on the car. And he was still listed as an authorized user on the credit card accounts.

So now Josh had late payments from the car and credit cards on his credit report. He was suffering from Stephanie’s financial meltdown, and from her bankruptcy. Stephanie now wanted to correct the problem she caused by learning how to repair credit after bankruptcy.

Fixing the authorized users shouldn’t be a problem. All Stephanie had to do was call the creditors and explain that Josh was not to be listed as an authorized user on those accounts anymore. But the car was a bigger problem. I explained that by co-signing, Josh had made an agreement with the banks. He agreed to be responsible for paying the car in the event that Stephanie could not. Josh and Stephanie were learning an important fact about divorce and credit scores: Divorce does not nullify an agreement with a bank.

If Josh wanted to repair his credit after Stephanie’s bankruptcy, he was at the mercy of the bank. I explained that he could call the bank and explain the situation, but there were no guarantees that the bank would remove the late payment notices.

The moral of the story is this: If you are divorced, split your credit apart! Refinance all loans. Cancel joint credit cards, or have them transferred into one person’s name. Remove your name as an authorized user on your ex-spouse’s accounts, and remove your ex-spouse’s name from your accounts. Learning how to repair credit after bankruptcy is hard enough without adding an ex into the mix!