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Protect Your Credit Score During Your Divorce

posted by admin 10:04 AM
Tuesday, February 15, 2011

If you are going through a divorce, you should immediately begin taking steps to protect your credit score. Your financial future depends on a good credit rating. Here are some tips for handling your finances during and after your divorce so that your credit score is protected.

Handling Joint Credit Cards and Other Debts

You should immediately order your credit report and find out exactly what debts you have.  In your credit report you will see all debts that belong to you and your spouse as well as the accounts that belong solely to you. You should closely monitor debts that your spouse has access to, such as credit cards, bank loans, mortgages and home equity lines of credit.  If you are concerned that your soon-to-be ex-spouse might borrow money in your name, you might want to sign up for a credit monitoring service.  These services will notify you anytime there is a change to your credit history.

It is important to note that even if your divorce settlement stipulates that your ex-husband is responsible for payment of certain debts, if he does not pay them or declares bankruptcy the creditors will come after you for payment!  The creditors don’t know and don’t care what your divorce settlement says. Because this was a debt that you both entered into, you’ll need to pay it if he can’t.  Therefore, you may want to include remedies in your divorce settlement to cover situations like this.  One way might be to make sure that joint assets are used to pay off all joint debt or have the property that is going to your ex-husband be placed in escrow until all debts are paid.

Close Joint Accounts If Possible

If possible, close all joint accounts. Most likely, you will only be able to close accounts that have a zero balance.  But, you should call all credit card companies, banks or other creditors to request that the account be closed.  Make it clear that you will not be responsible for any charges.  You should also follow up with a letter stating that you want the account closed.  Keep a copy of the letter as well as detailed notes of your phone conversations.  In both the phone conversation and the letter, ask that the lender report to the credit bureaus that the account was closed at your request.

Stay Current on All Joint Accounts

It is very important to make payments to all joint accounts on time even though you are going through a divorce. Unfortunately divorce negotiations can go on for a long time and not making payments or paying late can really hurt your credit score. Your credit rating will go down if a payment is late or missed entirely, even if your spouse is assuming the debt.

Freeze Accounts that Can’t Be Closed

If you find that you are not able to close an account due to an outstanding balance, request that a freeze be placed on your account.  This will prevent any further charges.  You will still be jointly responsible for the balance, but no further debt can be added to the account.  Remember to document all details related to this call and write and mail a letter. (Talk to your divorce attorney if your husband is using joint credit cards or other marital assets to travel with and/or buy gifts for his mistress.  There is something called dissipation of marital assets and if this is something that your husband is doing, your divorce attorney will need to make that part of any discussions/negotiations).

Close Joint Bank Accounts

Most couples have a joint checking and savings accounts.  These need to be closed as soon as possible, however you should talk to your lawyer before withdrawing money or closing your account since each state has rules about this. You will want to open a new account for yourself as soon as possible.

If you have questions about how you can protect your finances and credit, please feel free to contact one of our Divorce Financial Strategists™ here at Bedrock Divorce Advisors.

All content on this site/blog is for informational purposes only, and does not constitute legal advice. If you require legal advice, retain a lawyer licensed in your jurisdiction. The opinions expressed are solely those of the author, who is not an attorney.

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