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Couples & Money Category

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.

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Time share causes financial woes

Jun 15, 2009 | | Comments Comments Off

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.

Categories : Couples & Money, Q&A
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Fiance’s cold feet may just be prudence

Apr 02, 2009 | | Comments Comments Off

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.

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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.

Categories : Couples & Money, Q&A
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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.

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Q: I have accrued $7,000 on credit cards with a total credit limit of $10,000. My interest rates average over 20%. My wife has $4,000 in debt on two cards with a total credit limit of $14,000, and her rates are 6% and 9%. Is it a good idea for me to transfer my high-rate debt onto her lower-rate cards, or should we not risk ruining her good credit scores?

A: Your wife’s great rates might not last if you transfer debt to her cards. Credit issuers get wary when consumers start to max out their cards, and may raise her rates. And using more than 30% of any card’s limit can hurt a borrower’s credit scores, the figures that lenders use to help gauge credit-worthiness.

You might try to ask your card issuers for lower rates, and you should work hard on paying those balances off.

Categories : Couples & Money, Q&A
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