New Fed Rule Limits Credit Cards for SAH Parents!

[MrsPete]

His estate would have to settle it. If he had no life insurance, the creditor could not come after you because you did not sign your name.

Yeah, but for a married couple, that's really just semantics.

Here's what I mean. My husband and I together have X amount of money. Some of it is technically in his name, some of it is technically in my name, some of it is jointly owned. All of his accounts list me as beneficiary (and vice-versa); so if one of us died, the other would get all the deceased's money. So . . . let's say he was carrying a balance on a credit card, and he died. Sure, the money owed to his creditors would be deducted from what is HIS money, but it lowers the amount that is available to me; thus, for all intents and purposes, I'd be paying off his debt.

And really, even without a death, we'd both be paying off the balance. Why? Because even if he uses money that HE earned, money that isn't technically mine, it still lowers the amount of money available to us.

Personally, I would not lend my money to someone I thought could/would not pay it back, but that would be MY choice not "Big Brother"..............but thats just me...flame suit on........

Throw this into the works:

The banking world changed (many people'd say for the worse) back during the Clinton years when banks essentially were forced to loan to anyone except the most worthless of credit-risks. They could charge large interest rates, but the laws made it harder for the banks to say no. And look at the result: Credit cards boomed, the economy grew, and many people got themselves head over heels into debt. This is the pendulum swinging back in the other direction, back towards reigning in that credit monster.

Also, you're right to say that you wouldn't lend to someone who wouldn't be likely to pay it back -- none of us would throw our money away in that way. BUT credit card companies have been able to lend to people who are clearly credit-risks, and if they don't pay, the credit card company writes them off as a bad debt . . . so you and I, the taxpayers, pick up the tab. It's NO RISK to the credit card company. None of us want to pay more in taxes, so in that sense, it makes sense to do something about this ridiculous situation.

You are making this into an emotional argument, but it is a simple financial argument. It has nothing to do with how much a SAHM should be respected. The bottom line is, you decided to depend on someone else to provide your living for you. It doesn't matter to the bank that you and your husband made that decision jointly and based on what you thought would be in the best interest of your children. Those are important factors emotionally but they are not important to the financial institution that is considering you as a loan prospect.

That does make sense.

Mrs. Pete lives debt free. I do not. I know how it can be done, but we made a choice not to be that way.

True, we have been debt-free for about five years now, and it is an incredibly freeing, stress-free lifestyle.

However, we did have debt from the time we married 'til just before my 40th birthday -- well, before that because I brought a car payment into the marriage. During that time we had a mortgage and purchased several cars -- it was necessary at that point in our lives. For most of that time, we didn't have any credit cards, and we built up not only a GOOD credit rating, but literally a PERFECT credit rating (I remember buying a car, they checked our rating and the salesperson called a couple co-workers over to look, saying, "You don't see these often."). Ironically, it slipped when we paid off our house, which proves that good credit isn't necessarily a measure of financial responsibility; rather, it's just a measure of whether you live within your means and pay your bills.

 

[JoiseyMom]

His estate would have to settle it. If he had no life insurance, the creditor could not come after you because you did not sign your name.

You are indirectly responsible in that regard, but you are not legally responsible.

Here is a blurb in Massachusetts from a Divorce Attorney--keep in mind it says the Judge "can" order you to pay--doesn't say the law will MAKE you pay. There can of course be mitigating factors. http://www.dunningkirrane.com/advisor.html


Another state has a different law.

No judge can judge the binding contract of a creditor. Which is why some ex-spouses get stuck paying their own bills even if a judge decreed otherwise. So while a judge can say your husband MUST pay, VISA can still bother you for the credit card you obtained without an income. In my sister's divorce--she declared bankruptcy herself to avoid any misdeeds by her ex-post divorce. Of course these were joint cards. But again--while the courts can tell you one thing, the creditors do not care. They only care about their contract.


I have a friend whose husband (whom she was in the beginning stages of a divorce) die from injuries sustained in an accident. She did not sign any paperwork in the hospital. I think because they had a standing separation order--there was something to it, but this happened a few years back and my memory is sketchy....anyway, she did not sign any paperwork in the hospital.

He had no insurance and no life insurance. His week or so stay in ICU--had to be written off. They could not force her to pay as she didn't authorize anything. It was a blessing in disguise. She was a working mom (owns her own business), but that would have bankrupted her.


In Florida, judges can use discretion and distribute debts inequitably.


Virginia, where I live now--single debts are the responsibility of the spouse who acquires them. The state cannot force one spouse to pay the debt of the others. Joint debts have different rules, but are not subject to the new law mentioned in the OP--since joint debts are unaffected.


But the point is--it isn't true everywhere, and where it is true, VISA doesn't care what your judge says and will bug you if your spouse doesn't pay. Your lack of income will be an issue in that case and your credit negatively affected until it is remedied by the spouse.

My ex demolished our credit. In our divorce I made sure there was a stipulation that he take legal responsibility for all marital debts. I never got collection calls or letters. I did need to show my divorce papers 2 years later when I bought my first car, since my credit report was trashed. I also needed it 2 years after that when I bought my first home.

 

[Family Fun Mom]

I think the point many people here aren't getting is that married couples where one spouse stays home usually view themselves as a unit financially. I may not bring in income but I work we each play our part in the family. There is not "his" and "mine" there is only ours. He brings in the income but I handle it. In fact, he asks me before he spends anything, not the other way around. If you ask him, he'll say it's my money before it's his.

We don't use credit cards, so I guess this won't really affect us, but I still think this law sucks.

 

[bumbershoot]

OK, flame away----my personal opinion is that if you don't personally have the income, you shouldn't have a credit card. That goes for college students and SAHP.

I totally agree.

I was one of the college students with 3 credit cards...funnily enough I was perfect with them until I was out of grad school (I'd gotten those cards in my freshman year of college) and trying to create my practice... I'd never needed my mom to help with the cards until then.

Well sorry but as my DH says, his income IS my income.

Totally the same in my household, and has been since when we were engaged (just 4 months after we met).

But that's between the two of us. We can't possibly expect some corporate entity to believe us or go along with it.

I've also heard many stories (especially on Dave Ramsay, not sure about Suze Orman) about financial infidelity. Some spouses don't let their spouse know they are applying for credit with their income and then that spouse runs up debt. In many cases, the spouse who did this has NO income.

A friend of mine had a card, applied for after she married, that her husband didn't know about AT ALL. She would go to the store for groceries and get cash out along with the groceries, and would put that money towards the card.

I think it is a sad statement that so many of you feel that a SAHP isn't entitled to any of the perks that the working partner has, and yep to me this is a slap in the face, just based in the idea. Glad my DH has more respect than that. To me it is equivalent of you don't work, you aren't worthy. I wonder where it will stop.

I am fairly certain that most, if not all, of us with that opinion ARE SAHparents ourselves!

I'm worthy of many things, I'm worth quite a lot to my husband and son. But no, I'm NOT worthy of a credit card in my OWN name, without it being associated with an income-earning person's name, because I personally do not have an income.

I have a friend whose husband (whom she was in the beginning stages of a divorce) die from injuries sustained in an accident. She did not sign any paperwork in the hospital. I think because they had a standing separation order--there was something to it, but this happened a few years back and my memory is sketchy....anyway, she did not sign any paperwork in the hospital.

He had no insurance and no life insurance. His week or so stay in ICU--had to be written off. They could not force her to pay as she didn't authorize anything. It was a blessing in disguise. She was a working mom (owns her own business), but that would have bankrupted her.

It actually probably wasn't because they were separated. I was listening to an "ask a lawyer" show a few months ago, and the guy said that if the estate doesn't have enough money to pay the medical bills of a deceased person, the spouse is NOT liable for them.

Found that with FIL...what he owed over medicare (medicaid? why can't I keep them straight in my head...he was 79, he had the gov't med-whatchamacallit) was written off without a question, as he had NO estate.

Basically they can go after what is in the estate (and life insurance, he said, is not part of the estate, I imagine because it's not paid TO the deceased, which makes sense), but after that it gets written off.

Of course, they can TRY to get you to pay, creditors do like to play those games after all, but they can't legally make you pay.

Medical bills only is what I'm talking about here, and only if the person dies before the bills are paid.

You are making this into an emotional argument, but it is a simple financial argument. It has nothing to do with how much a SAHM should be respected. The bottom line is, you decided to depend on someone else to provide your living for you.

I completely agree.


***********

Since I held these views for several years, it never even occurred to me to apply for a card in my own name...am kinda wishing I had, now!

 

[NYCDiane]

Isn't that the truth. At the local university that I live near, the incoming freshmen can apply for credit cards as soon as they arrive. I'm pretty sure the university makes money for allowing these credit card companies to issue cards on campus. You can be 18 with no job and get major credit cards with pretty large credit limits.

I find this new law outrageous. While I'm not a fan of credit cards, how in the world can a stay at home parent establish a credit rating? Could you imagine what it would be like for a stay at home parent to do much of anything if the working spouse dies or divorces without any credit of their own?

Some employers even require good credit in order to work for them. What about getting an apartment or even qualifying for auto insurance with no credit rating?

I guess the people who created this law will end up having very good retirement packages and are a lot out of touch with those people who aren't as lucky financially as they are. That's just my opinion, though.

By getting a job and establishing credit?

Simple enough. Even if you want to be a SAHP, you can still work part time 3 or 4 evenings a week while your spouse takes care of the kids. Then, you'll have a job reference and you can establish credit.

 

[michelle06]

This is a shame because it is a double standard. I know families who were devastated by divorce and credit cards. One spouse took credit cards in his/her name only. Then they divorce. Then the spouse whose name was not on the card was still legally responsible for the debt due to the marriage. Because the spouse who took on the debt was unable to pay it back (one reason for the divorce), the other spouse made good and eventually paid back 10s of thousands of dollars.
I think it is a double standard that a spouse can not get a card on their own, but in a divorce, they are still responsible for the debt of the other spouse.

 

[Marionnette]

By getting a job and establishing credit?

Simple enough. Even if you want to be a SAHP, you can still work part time 3 or 4 evenings a week while your spouse takes care of the kids. Then, you'll have a job reference and you can establish credit.

Comments like that just fan the flames of the Mommy Wars.

 

[Marionnette]

Totally the same in my household, and has been since when we were engaged (just 4 months after we met).

But that's between the two of us. We can't possibly expect some corporate entity to believe us or go along with it.

Except that the regulation is not coming from some corporate entity. It is coming from the Federal Reserve. The corporate entities have been fine with offering credit cards to individuals with no individual source of income.

 

[Jeff_G]

I have an idea, why don’t we the people issue a mandate to the federal reserve they cannot extend credit to the government until they prove their income.
Or better yet that they cannot continue to devalue our dollar by printing money like it’s an endless supply…

 

[fakereadhed]

Except that the regulation is not coming from some corporate entity. It is coming from the Federal Reserve. The corporate entities have been fine with offering credit cards to individuals with no individual source of income.

 

[herdtoDisney]

I don't understand-does this law also mean you have to be 21 to get a credit card? My ds was going to apply for one when he gets home from school (I, myself, applied for and got a credit card at his age. I have it do this day and never carry a balance on it-also, DS works both at school and home so has income.) I want him to build credit, as I did.

Because I had this before marriage, it was mine, so I had it during the time I was a SAHM. My dh is not a user on it, nor I on his-in fact, I won't do that. I guess with my kids, I will encourage them all to get a card before marriage. While I have no debt other than our home, I do indeed find it helpful to actually have a card, especially since I am not comfortable using my debit card online. I do think the new regulation is detrimental to SAHP's.

 

[cm8]

By getting a job and establishing credit?

Simple enough. Even if you want to be a SAHP, you can still work part time 3 or 4 evenings a week while your spouse takes care of the kids. Then, you'll have a job reference and you can establish credit.

I agree with this! Being a SAHP does not mean you are any ways devalued. The means to pay it back has something to do with it. As far as both parties being on the hook for the debt, it is ONLY if the spouse was/is joint owner and therefore responsible.

Stop making this to be a bigger issue than it really is.

 

[si-am]

I think this is just one of those choices/sacrifices you have to make when you decide to stay home and not work. Choosing to become entirely dependent on your spouse means giving up the security of having your "own" income and credit. For many people, it's worth it to stay home with the kids, for others it's not.

Yes, it makes divorce sound like a super scary thought, but it always has been for a SAHP, really. Alimony/child support doesn't start the minute you decide to leave (or are left).

 

[eliza61]

I read it as "Big Brother" once again, stepping in and telling us/consumers/SAHM that they know us better than we know ourselves, (we cannot control the impulse to buy without being responsible to pay it off, its right their in black and white) AND that they/WE are not credit worthy because they/We are not financially independent.

The new FEDERAL rule slid by many.....it will have a HUGE impact on many SAHM/D's and the like.
It goes into effect 10/1/11 so if you fit that criteria, Id be getting credit in your own name to establish your "worth" ASAP!

!

Uhm a1tinkfan, with all due respect. we can't. This past financial disaster has proven loud and clear that we (the general american public) cannot not handle easy credit.

You sound like all the stories of people living way beyond their means are made up?

Plain and simply we've have already proven that in general people will not handle their finances. Until recently we did not save (the saving rate was in the negative) and we are still not saving for retirement, the average household was about 7,000 in debt and people were buying houses that they knew they could not afford.

Banks make money by lending money out. So sure maybe they should make stringent guidelines but as once again the past 20 years have shown, the banks are pretty much greedy and will offer any type of vehicle whether or not the consumer can afford it.

So please tell me, where have you been the last few years? Please stop with the big bad governement ruining my life song and dance. John q. public created this mess or at least contributed to it very much and I have not seen any recent indication that, that particular mentality has changed. So yeah, since we have proven we are incapable of doing the right thing, regulate away.

Because the bottom line is when a sahm or any one else defaults on their credit it cost ME money (directly or indirectly) and just like I would an outta of control child, if you can't control yourself with a credit card than I have no problems putting limitations on your (not your personally) ability to get one.

 

[mhsjax]

I have an idea, why don’t we the people issue a mandate to the federal reserve they cannot extend credit to the government until they prove their income.
Or better yet that they cannot continue to devalue our dollar by printing money like it’s an endless supply…

YOu are so right. I think that this is really what bothers me. I am a SAHP and I do have my own credit, worked for 15 years before I became a SAHM and like several people here, my credit , at that time,was actually better than my DH, but only slightly.

But for the Gov't to sit there and actually tell the banks what they should do to alleviate credit risks is just beyond words for me. They don't know their heads from their butts and spending totally out of control and on things that most of us would find crazy, and yet they feel that they can tell others how to manage.


I wonder if the saying "People in glass houses, shouldn't throw stones" means anything to them.

 

[mhsjax]

Uhm a1tinkfan, with all due respect. we can't. This past financial disaster has proven loud and clear that we (the general american public) cannot not handle easy credit.

You sound like all the stories of people living way beyond their means are made up?

Plain and simply we've have already proven that in general people will not handle their finances. Until recently we did not save (the saving rate was in the negative) and we are still not saving for retirement, the average household was about 7,000 in debt and people were buying houses that they knew they could not afford.

So please tell me, where have you been the last few years? Please stop with the big bad governement ruining my life song and dance. John q. public created this mess or at least contributed to it very much.

And the Gov't dangled this big fat shiny play thing in front of the public, and basically encouraged the banks to over extend. Yep, we did over spend, well some, ok lots of people did. But it was encouraged, it was practically forced.

The gov't has its own little nasty hand in all of this mess, you also need to blame them for some of it. I don't think the John Q Public crated the employment fiasco, and they sure didn't create the housing fiasco. Let's face it, we all screwed up, but the Govt screwed up just as bad if not worse than the public did.

I think at this point most of the people I know think that the Gov't can't handle anything, which is why they need to get the heck out of everyone's lives and fix their own problems first. As for the rest of my opinions, I can't get into those here, it isn't allowed.

 

[crisi]

I think the point many people here aren't getting is that married couples where one spouse stays home usually view themselves as a unit financially. I may not bring in income but I work we each play our part in the family. There is not "his" and "mine" there is only ours. He brings in the income but I handle it. In fact, he asks me before he spends anything, not the other way around. If you ask him, he'll say it's my money before it's his.

We don't use credit cards, so I guess this won't really affect us, but I still think this law sucks.

They may view it that way, but that isn't the legal truth in most states. In most states, you may be a single unit financially, but you have no claims to your spouses income or assets. If you divorce, your KIDS have a claim, and you MAY get spousal support.

The government and financial industry have to care about the legal reality of his, mine and ours. Not the touchy feely that most of us have a good relationship with mixed finances.

To me, it makes perfect sense. You need income or assets in order to have credit extended to you. It makes no sense to extend credit to someone who is dependent on the good will of another individual in order to make payments.

 

[Tink-aholic]

OK, flame away----my personal opinion is that if you don't personally have the income, you shouldn't have a credit card. That goes for college students and SAHP.

Would you feel comfortable loaning money to someone with no income? What if your spouse left you and you are penniless? Unless you are in a community property state and your spouse is jointly liable for your debts. I understand that many men and women choose to be SAHP and that works out for their families, but this is just a sacrifice that has to be made. Giving someone without their own income a credit card is just as bad as giving out mortgages to people who haven't established their ability to repay.

Just my personal opinion and I'm not going to be drawn into a battle with anyone over it.

 

[FINFAN]

I did not read everyone's posts, but wouldn't it be feasible to offer a very low limit, even $500- $1000 so a person could be building their credit history yet not really have a ton to get in trouble with? I am thinking more along the lines of my soon to graduate DD...who has no plans of getting married/combining incomes etc. Again, penalize the ones who are playing by the rules to make up for those who didn't.

 

[sk!mom]

To me, it makes perfect sense. You need income or assets in order to have credit extended to you. It makes no sense to extend credit to someone who is dependent on the good will of another individual in order to make payments.

Well said, completely agree.