Preparing for Cohabitation: Credit Problems and Resolving Disputes
Preparing for Cohabitation: Credit Problems and Resolving Disputes
Preparing for Cohabitation: Credit Problems and Resolving Disputes
After her divorce, Ann had to pinch her pennies. She had a few revolving charge accounts, but never did want credit cards -- that is until she met Tom who later moved into Ann's apartment. They agreed that since both of them were working, they would split the rent and all other bills equally. Every month, Tom's check was there on time and things were going well. Then, after they had been together for six months, Tom suggested that they open some a joint credit card account or two -- just in case they needed it. Ann reluctantly filled in and signed the applications Tom brought home. Ann never saw a statement when she picked up the mail and assumed that the cards were not being used. But when Tom moved out nearly nine months later and left to another state, Ann found out -- for the first time -- that Tom had the monthly account information sent to her work address and had run up nearly $15,000 in debt -- for which Ann was ultimately responsible -- since Tom filed for bankruptcy shortly after leaving.
How many times have you been asked to sign this or sign that -- and you've done it, no questions asked. Many people go through relationships, trusting their partners and not realizing the significance of what they have signed until the relationship comes to an end. Then, for the first time, they find out that they are obligated on joint credit cards, retail accounts, or bank loans.
It's important to remember that even though you might not have incurred the debt personally, if you signed to be jointly responsible on the account or bank note, you are just as responsible as your partner. And worse yet, if the obligation is not paid, the creditor has the choice of going after you, your partner, or both of you.
That's why it is essential that full financial disclosures be received and given before you make a commitment to long-range cohabitation. And remember: Even if you and your partner have an agreement that provides who is to pay what obligation and by when, if he or she doesn't and skips out, the creditor can still come after you to collect -- because your agreement with your partner has no effect upon the credit contract with the creditor.
And that's why it is very important to find out from each creditor if your signature is on the note, credit application, or debt instrument which was signed by the person or persons responsible for the account. If there is ever a question, you should require the creditor to provide the signature card or other documents and make sure it's your signature. If it's not -- and your name was signed by someone else without your authorization, then you may not be responsible.
If you did sign an account -- say at the hardware store -- and your partner ran up the bills, make sure to report your situation to the creditor in writing so that this may be taken into consideration if you apply for an individual account. If you are denied credit when you apply for an individual account from anyone, you have the right by law to know exactly why your application was turned down.
On a regular basis, you should check your credit report to see if there are any inaccuracies. If there are, give the creditor additional information to show that you are a good credit risk. If this doesn't work, find out which credit service is being used and apply to each individually for correction of your record. This will take time, but detailing that your former partner was responsible should help your record.
Under the Fair Credit Reporting Act, you can learn about your credit rating simply by asking a local credit bureau for a copy of your credit history. You can find a local credit reporting company in the Yellow Pages and your cost is comparatively minimal. So don't be taken in by advertisements that tout these types of services for a fee. And don't purchase services that, for $100 or $250 will straighten out your credit. Most of these services are scams.
You also need to know that, in most instances, negative information that might appear on a credit record -- like bankruptcy -- will generally be removed seven years after it first appears. If you disagree with any information in your report, notify the credit bureau immediately in writing. The bureau must investigate your complaint with the source of the information you dispute.
Another word to the wise: What if you have signed as an obligor on an automobile loan and, as part of your settlement with your partner, he or she is to take the car and agrees to pay off the debt? Make sure he or she refinances the car before you transfer title so the debt is in your partner's name, not yours. The same is true of furniture and other installment loan. Remember: Trusting someone with whom you no longer have a relationship to pay your debt is dangerous.
What if you and your partner, as part of your planning, have given each other durable powers of attorney so each of you could make financial decisions for the other? If you don't cancel these documents immediately, there is the potential for abuse.
Because the issues surrounding unmarried couples are complex, you and your partner should not attempt to make final decisions until you seek competent legal help. Finding and hiring a lawyer to help you with your will, your cohabitation agreement, your will, your health care documents, and other advice is an important because you are placing your economic future in his or her hands. Since, for the most part, courts do not understand the issues facing unmarried cohabitants, , much less the solutions, it may be difficult to find an experienced professional who understands your special concerns and needs.
Since matrimonial, estate planning, and elder law attorneys are professionals who deal with relationships every day and are adept at planning and tax-related matters that may affect you and your partner, they may best fill the bill. However, you should seek information from local lesbian and gay business guilds or community organizations which may recommend a lawyer knowledgable and qualified to advise you.
A word of advice: Don't use lawyer friends who won't charge you. But you might ask friends and family about whom they have used and find out what they liked -- and didn't like -- about an attorney. The best question for you to ask is "Would you use this lawyer again?"
Since clients often misunderstand the role of the lawyer, they have no specific objectives or goals, thinking that the lawyer has all the answers and will handle it all. This is a mistake. Dealing with a lawyer without a strategy is no different than trying to build a home without a plan. You must become an informed partner in the process with your lawyer who should explain your options and the risks of each so you can make informed decisions about your future. Then, as a client, you will bring your lawyer information so that he or she will be able to prepare documents to implement your plan.
After you provide the facts, you must tell your lawyer your objectives. Then your lawyer should explain to you the means by which your objectives can be attained. Or, if they can not be attained, why not. You and your lawyer should agree upon both halves of the puzzle.
Your lawyer should communicate with you about the progress of your situation and inform you of all of your options. Your lawyer should also comply with your reasonable requests for information. Early on, you and your lawyer should agree about the objectives of representation and the means of pursuing your objectives and goals. Here are some suggestions to have a good relationship with your lawyer:
1. Understand how you will be billed and how you will pay your fees and expenses. Make sure your fee arrangement is in writing and that you understand it before you sign.
2. Understand the time increments on which you will be billed. For example, if you are billed in tenths of an hour -- 6 minute intervals -- and you use 30 seconds when you call, you will be billed for six minutes. So save up your calls.
3. Understand who will represent you -- the attorney or an associate. Try to get an estimate of how long it will take to complete the task and an estimate of how much it will cost. It is also important to know whom to call when you have a problem and who will return your calls.
4. Oftentimes, you will not need to talk to the lawyer. Ask for the paralegal or secretary whose time is billed at lower rates.
5. When you have questions, write them down and then either call or make an appointment with the lawyer. Take notes of what you ask and the answers given so you can keep up with your case.
6. If there are billing questions, talk to billing clerk or the secretary who handles this aspect of the business. The lawyer should be the last resort.
7. If you don't understand something, ask. If you have a problem with way your lawyer is handling the case, then ask him/her about it. Don't sit back and let it fester.
8. Especially in this newly emerging area of the law, no lawyer should guarantee or promise you a result.
9. Since a lawyer is neither a counselor nor a financial planner, he or she should not be expected to make personal decisions for you. Your job is to be totally honest with your lawyer and to provide complete information. Incomplete or bad information often means bad results.
Make sure to ask your lawyer about alternative ways to resolve disputes that may arise between you and your partner. Litigation -- that is, going to court with lawyers -- is the method of dispute resolution most familiar to lawyers and the public. If you've ever watched "The People's Court" on television, you may have seen people and their witnesses appear before a judge. After they give their sides of the story, the judge goes back in his office and then makes a decision on the spot in open court -- all in a half-hour (minus commercials).
Unfortunately, it doesn't happen that way in the real world. In most instances, courts are costly, inefficient, and slow. In fact, litigants may be in the system for years, especially when the issues involve matters the courts either don't understand or don't handle regularly. Decisions are rarely made on the spot. This means that the very question that must be resolved may not be resolved -- or may be delayed too long.
Today, not everyone's needs are best served by using the court system. This is especially true when it comes to unmarried couples. Since you are interested in privacy in your relationship, you should also be interested in a way to resolve your disputes privately. Through alternative dispute resolution techniques, you can try to resolve disputes that otherwise might lead to termination of your relationship. And if you and your partner do choose to terminate your relationship, you can do so privately without your personal business being made public. The court system is not be the best place for gays and lesbians to resolve disputes.
If you and your partner want to consider alternatives to litigation that can help keep the necessary parts of your relationship intact, you must voluntarily agree to use that alternative. In contrast to courts which are public, expensive, and comparatively slow, alternate dispute resolution techniques are private, faster, and less expensive in time, money, and emotional stress. Through what is known as "Trial by Contract", you and your partner can agree upon a neutral third party to either mediate your dispute or arbitrate the issues according to relaxed rules and procedures.
Mediation is a non-binding way in which an impartial facilitator who has no coercive powers and can begin an exchange and suggest solutions to some your problems. Mediators can be lawyers, psychologists, or counsellors -- or someone you both may choose to act as a neutral facilitator. Some states require licensing while others do not. In any case, if you use mediation, it is not wise to enter into any long-range agreement without a lawyer reviewing the matter because of tax and other consequences.
Arbitration, on the other hand, places a third party or a panel of three independent neutrals -- lawyers, accountants, or other experts you choose -- in a decision-making position. This decision can be either "final and binding" or non-binding, depending on your wishes. Depending on how you prepare your agreement, you can resolve all issues or just one issue through an abbreviated, relaxed, private proceeding.
Because the entire arbitration procedure is governed by the desires of those who utilize it through a contract, you can agree that if the decision of the arbitrator is not challenged by either of you within a specified time -- say 30 days -- the decision will be final. Or there can be "opt out" provisions which allow either of you to take advantage of the court system if you're not happy with the arbitrated result.
If a financial question is presented -- such as the value of a particular asset or the amount of support to be paid under a cohabitation agreement or the way in which property should be divided -- you and your partner can even agree to limits through a form of arbitration called "high-low."
Always discuss with your lawyer all dispute resolution options with which you and your partner can resolve difficult disputes that may arise efficiently, privately, and less expensively. And if you intend to use alternative dispute resolution techniques, make sure your lawyer is fully familiar with the type of clauses that will protect you including how to choose arbitrators, time limits, and rules.
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