Ask Liz Weston

Dear Liz: My husband is quite a bit older than I (about 18 years). When we married, we agreed that we should put all our savings into joint funds and into his retirement accounts. Our thought was that since I’m younger, we’d have much earlier access to retirement money by funneling it into his retirement accounts (as opposed to mine), and that it was unfair for me to sock away money that he may never have access to.

Intellectually it feels like the fair way to go, since we both work and are equally responsible for our family’s finances. The money we’ve been putting in his retirement accounts will ultimately belong to both of us. But emotionally, I feel anxious about not having my own accounts. Should I just work this out in therapy (joking) or am I right to be concerned? What would you advise for a couple like us with an age difference?

Answer: You are likely to outlive your husband by at least two decades. Rather than focusing on early access to retirement funds, you should be making sure that money lasts for a lifetime: your lifetime, not just his. By the way, considering your own needs is not unfair — it’s sensible. A loving husband wouldn’t want to leave you old, alone and impoverished.

You may not need a session with a therapist, but you should definitely have a meeting with a fee-only financial planner who can review your situation and make sure the needs of both of you are considered.

Dear Liz: I am a divorced 49-year-old man who has a lot of debt. I recently (and shamefully) turned in the keys on my ridiculously upside-down home in Arizona. My credit scores have plummeted and all my credit cards have raised their rates to 28% and above.

I am remarried to a wonderful woman who is more fiscally responsible and wants to buy a home. I’d like a quick fix, but that seems unlikely. I’ve avoided commingling our assets and credit so far, but recently I asked my wife to cosign a personal loan to consolidate my debt. I’ve also requested to be an authorized user on some of her high-limit, low-balance credit cards.

I fear this may be a break point for our relationship. She has worked hard to be responsible and I — well, I have not. My strategy seems sound. What do you think?

Answer: Your plan could dramatically lower your interest costs, allowing you to repay your debt more quickly. It also could help rehabilitate your battered credit scores.

But the cosigned loan would put your new wife’s credit in your hands. If you missed a single payment, her hard-won credit scores could plunge overnight. If you failed to pay the debt, she would be responsible for it.

That’s a huge risk for her to take, so you shouldn’t hold it against her if she declines. Adding you as an authorized user of her cards involves much less risk, since she wouldn’t have to actually give you access to those cards, but she’s under no obligation to do that either.

If she turns you down, you might want to consider a visit with a legitimate credit counselor (one affiliated with the National Foundation for Credit Counseling) as well as a session with a bankruptcy attorney so you can be apprised of all your options regarding your debt.

Dear Liz: The day before my son got married, he proudly had a long-term 800-plus FICO credit score. The day after he got married, his FICO score became 600. It seems his new wife had many outstanding major debts incurred before the marriage. They live in a non-community-property state. How can he rebuild his credit either with or without a divorce?

Answer: Unless your son filed for bankruptcy the day after his wedding, the scenario you describe is pretty much impossible.

Our credit reports don’t get merged or combined when we marry. And it’s highly unlikely that any of the debts his wife incurred before marriage would be added to his credit reports unless he agreed to be added as a joint account holder or an authorized user.

As a practical matter, of course, he’ll want to help his new wife address these debts, since they’ll affect the couple’s life together.

But he’s not legally responsible for them. Because she incurred these bills before the wedding, they’re her separate responsibility in every state — community-property states included.

An appointment with a marriage counselor might be in order if she actively concealed these debts from him. But they needn’t contact divorce attorneys to fix this problem.

They should probably make two more appointments, however: one with a legitimate credit counselor affiliated with the National Foundation for Consumer Credit (www.nfcc.org) and another with an experienced bankruptcy attorney. The counselor and the attorney together will provide a complete picture of her options.

By the way, just as there’s no such thing as a combined credit report, there’s also no such thing as a “long-term” credit score. Each score is a snapshot of your credit situation and changes as the underlying information in your credit reports changes — which is basically all the time.

Dear Liz: My spouse has extremely high credit card debt. All cards are in her name only. Where do I stand legally if she dies or we divorce? What can a person do about such uncontrollable abuse of credit cards? The interest alone is horrific, but she pays it.

Answer: If you live in a community property state and don’t have a prenuptial agreement, debts incurred during marriage are typically considered owed by both parties (even if there’s only one name on the credit card). Community property states include California, Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

In other states, debts incurred by one spouse are usually that spouse’s responsibility alone, unless the money was used to buy family necessities such as food or shelter. If you divorce, she probably would be responsible for these separate debts. If she dies, creditors could go after her separate property and may be able to go after her half of any jointly held property.

The rules vary enough by state that you’d be smart to consult an attorney about your potential liability.

Wherever you live, though, this debt is affecting your union and your future together. The money she’s paying in interest isn’t available for other purposes, such as saving for retirement or your children’s educations, plus it’s clearly causing tension between you. If you want your marriage to succeed, you should invest in sessions with a marriage counselor and a fee-only financial planner.

Dear Liz: I have reunited with the love of my life. There is one problem: She has a bankruptcy on her record. If I have very strong credit scores and we marry, how will her credit affect my chances of buying a house?

Answer: You each will retain your individual credit reports when you marry. They won’t be combined.

If you plan to use her income to help qualify for a home purchase, though, her credit scores will be used to determine the rate and terms you get. If the bankruptcy is recent or if she hasn’t taken steps to rehabilitate her credit, that means you could pay more interest or have more trouble finding a loan.

If you don’t need her income to qualify, on the other hand, her credit troubles don’t need to affect your loan.

Dear Liz: My wife and I each had excellent credit when we married 10 years ago. We are now divorcing (amicably). Since we married, we have put everything in her name: two houses in succession, three cars, all car insurance and utilities. We refinanced our house in February with her name first.

I recently opened checking and savings accounts in my name only and had my paycheck deposited there instead of our joint account.

What steps should I take before a divorce decree to be sure I retain a great credit score?

Answer: To protect their credit, divorcing couples should make sure to close all joint credit accounts and transfer any balances to the partner who will be responsible for paying the obligation.

The same is true for mortgages and other loans that are in both names. Whenever possible, these debts should be refinanced in the responsible party’s name only.

All this should be done before the divorce is final. Otherwise, your ex can trash your credit — deliberately or not.

If your name is still on the mortgage, car loans or credit cards, your scores could plummet if she misses a payment. You would have little recourse because your creditors aren’t bound by your divorce agreement, even if it plainly requires her to stay up to date on these obligations.

Closing accounts and opening new ones can inflict temporary dings on your credit, but these pale in comparison to the damage done by a single skipped payment. If you want to keep that amicable vibe and your excellent scores, separate your credit accounts now.

Dear Liz: My fiance and I are trying to secure financing for our first home, but his credit scores are just below the mark. I was thinking of adding his name to my credit card account so that my available credit line shows up on his report. Would this boost his scores at all? Is there any danger of it lowering his scores?

Answer: If you have a good history with this account — you always pay on time and you’re not carrying a large balance — adding him as an authorized user may help his scores.

The key is whether the credit card issuer will “export” this data from your credit file to his. Some issuers automatically do this export for any authorized user; others do so only for spouses. The only way to know for sure is to ask your credit card company.

If the data is exported to his file, it will be used to calculate his FICO scores, which are the scores most lenders use. The company that creates the FICO briefly toyed with the idea of excluding authorized user data in its latest formula, FICO 08, but ultimately decided to continue using it.

If you add him as an authorized user, you don’t need to give him a card or access to your account. What you should do, however, is take some time to go over his credit reports and discuss what steps he’s taking on his own to clean up his financial act.

A temporary boost in his scores might land you a mortgage, but you could wind up much worse off financially if he continues to mishandle his credit.

Dear Liz: My husband signed up for a time share when we were on vacation, just months before we bought our first home. Now one year later, with a baby on the way, this time share is taking $189 a month out of our pockets plus $2,828 a year for maintenance fees.

This is dragging us down financially, and no one can tell us how to get rid of it! Please, please tell me how.

Answer: You can try to sell your time share, but typically there are far more desperate sellers than there are buyers for these “opportunities.”

At best, you’ll reap only a fraction of what you originally paid, and you may have to in essence give away the time share to anyone willing to pay the maintenance fees.

You’ll still need to pay off the loan you used to buy the time share, or you’ll risk damage to your credit.

You can learn more about selling time shares from the Timeshare Users Group.

If you haven’t already done so, it’s time to have a chat with your spouse about impulse purchases. Many happily married couples learn to discuss all purchases above a certain dollar amount, such as $100. They certainly don’t enter into long-term commitments without advance discussion and the agreement of both partners.

Because your husband is clearly vulnerable to a good sales pitch, you also might want to talk about not entering any high-risk zones — such as an auto dealership or a seminar at an airport hotel — unless you’re both present.

Dear Liz: I filed bankruptcy in 2005, just before the laws changed. My husband-to-be is hesitant about marriage since he believes my bankruptcy will affect his business and his shining credit score. I have been telling him my past financial tribulations do not reflect on his credit score. Where can I find this in writing to prove what I say is true?

Answer: There’s no such thing as a joint credit report or a joint credit score. Each individual has his or her own, and they aren’t combined when you marry.

Your troubled history could affect him going forward, however, if you two decide to get a loan together, such as a mortgage. Your lower credit scores could make it more difficult to get approved and probably would trigger a higher interest rate than he’d have to pay otherwise.

His reluctance to marry you may have deeper roots, of course. Since your finances have foundered before, he may worry that they could again, and he would be on the hook for bailing you out.

You may need to reassure him that you’ve mended your ways.

That means living within your means with no credit card debt, a substantial pad of savings and adequate insurance. If you’re not there yet, you may at least need to prove to him that you’re well on your way.

Otherwise, his reluctance to marry wouldn’t be cold feet. It would just be prudent caution.

Dear Liz: My husband was married and owned a home with his first wife. In the divorce, she got the house with the stipulation that he would receive one half of the $25,000 down payment when it was sold. She defaulted on the mortgage, however. The lender sold the house at auction and then came after my husband for the amount that was still owed. The divorce papers had stated he would not be liable for such a debt. My husband attempted to sue her for the $9,000 he paid the lender plus the $12,500 he was promised but she filed for bankruptcy and his claim was one of the debts that was discharged. I’ve done research on the Internet and it seems like his debt shouldn’t have been erased. Do you think we have a case?

Answer: It depends.

If your husband’s ex filed her bankruptcy case before Oct. 17, 2006, when the new bankruptcy reform law took place, then her debt to him could legally be erased, said Leon Bayer, a Los Angeles bankruptcy attorney.

The new law, by contrast, says that a debt created by a divorce agreement isn’t dischargeable in Chapter 7 bankruptcy liquidation, although it may be erased in a Chapter 13 repayment plan.

If the debt was incorrectly discharged, your husband would be able to pursue his former spouse for the $12,500, Bayer said. In addition, he could sue her for the $9,000 he paid to the lender if the divorce court required the ex-wife to hold him harmless from that debt, as your letter seems to indicate.

By the way, there is a chance that the lender shouldn’t have been able to dun your husband for the $9,000 debt. Several states, including California, have “anti-deficiency” laws that prevent mortgage lenders from trying to collect such debts if the loan in question was a “purchase money mortgage”–in other words, if the loan was used to buy the property. If the loan was subsequently refinanced, though, anti-deficiency laws typically don’t apply.

If you still think your husband might have a case, Bayer recommends contacting a local attorney for help.