Access to funds – for living expenses and attorney’s fees – is often a challenge for a stay-at-home spouse or domestic partner during a dissolution. The working spouse or partner continues to have income and the ability to be self-supporting. As a result, often the stay-at-home spouse or partner must rely on credit cards to meet their needs, at least until there is a support order or community property has been divided. Unfortunately, often the stay-at-home spouse or partner does not have any credit cards in their name and lacks a credit history, which might make their access to funds difficult, at least at the beginning of a dissolution. This is why planning prior to the dissolution of the marriage or partnership is critical.
While married, stay-at-home spouses or partners – even in a healthy relationship – should work to build their own credit history. There are ways to do this, but the help of the working spouse or partner is likely required. As one can imagine, if a marriage or partnership is troubled, this help is not going to come easily, if at all. Therefore, if a marriage or partnership dissolution occurs, the stay-at-home spouse or partner is left “out in the cold” and at the mercy of consumer credit rules and laws often making access to credit impossible. But fortunately, this may be about to change.
On October 17, 2012, the Consumer Financial Protection Bureau (CFPB) proposed updates to existing regulations to make it easier for spouses or partners who do not work outside of the home to qualify for credit cards. The proposal would allow credit card applicants who are 21 or older to rely on third-party income (their spouse or partner) to which they have a reasonable expectation of access. This proposal applies to all applicants regardless of marital status, and therefore the CFPB expects that it will ease access to credit particularly for stay-at-home spouses or partners who have access to a working spouse or partner’s income.
Planning with regard to credit access will become much easier if this new regulation is implemented. The new regulation would not only allow a stay-at-home spouse or partner to have access to funds for living expenses and attorney’s fees before a dissolution is final, but also to build a credit history by the conclusion of the dissolution, which is vital for personal financial security.