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Proposed change will make it easier to get credit in divorce

In 2009, the U.S. Congress passed the Credit Card Accountability, Responsibility and Disclosure, or CARD, Act. The goal of the law was to prevent consumers, particularly vulnerable college students, from being able to take out a large number of credit cards that they were not truly qualified for. Specifically, the law aimed to prevent college students from racking up large amounts of credit card debt that they (and their families) could not pay, and significantly damaging their credit scores in the process.

However, one provision of the law has proven to have unintended consequences for spouses who are contemplating or going through the divorce process. That clause prevents credit card companies from approving applications that are made on the basis of family income. Instead, companies could only issue approvals on the basis of the applicant's income alone.

So, under the law, spouses who give up their jobs and careers to care for children or other family members and who do not have an income as a result are not eligible for credit cards in their name alone. This means that those spouses are unable to build credit in preparation for and in the wake of divorce, placing their financial future in jeopardy.

Thankfully, it appears that federal officials are taking steps to rectify this unintended consequence of the law. Earlier this year, the Consumer Financial Protection Bureau proposed a change to the CARD Act under which spouses who do not work will be able to apply for credit card in their name based upon the total income of their household.

Source: Forbes, "Five Best Financial Tips for Women Divorcing in 2013," Jeff Landers, Dec. 18, 2012

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