Keeping Your Credit in Check While Filing for Divorce

Posted by DivorceNetwork, February 2010

 

Filing for divorce brings with it a whole slew of matters to take care of. Many of
these tasks are related to finances, due to the separation of assets that takes place following a divorce. While you’re sorting out all of the details, one thing that you don’t want to forget is to keep your credit in check, and be sure that you’re paying all of your bills on time.

One thing that many people are not aware of is that after you get divorced, you and your former spouse are still responsible for fulfilling any contracts or agreements you established as a married couple. That means that any loans you took out, such as home loans and car loans, must still be paid back in full, as well as any remaining credit card balances.

Here’s the tricky part: you are still responsible for getting your loans paid off even if the court has ordered your former spouse to take care of the payments. That means that if your ex falls behind on payments, that act of delinquency will show up on both of your credit reports. This is why so many people filing for divorce end up also filing for bankruptcy in a matter of months. It can be a nasty cycle, as the payments pile up and your credit score continues to drop.

Luckily, there are several things you can do in order to avoid this situation. First of all, you should close all joint accounts immediately before filing for a divorce, before your former spouse has the opportunity to try any funny stuff. After you pay your remaining credit card balance with family funds, you can open a brand new account in your name and start building your own credit history.

Second, it is recommended that before you file for divorce that you refinance any loans that you have for cars or other possessions, and put them in one person’s name. That person will be responsible for making all of the remaining payments, and is essentially buying the item from their former spouse. The only possession that you can’t do this with is your home, as both of you need to receive equity from that investment. For this reason, it’s a good idea to simply sell your home and then put one person in charge of the mortgage payments.

Third, if you find that you have more debt than you can handle, consider accessing a free resource such as the National Foundation for Credit Counseling  This non-profit organization provides debt settlement and management services for couples filing for divorce. Remember to avoid digging yourself in deeper if at all possible, and curb your spending to a reasonable amount if you’re having trouble paying bills. Divorce can be a very tumultuous time, but it will settle down. And when it does, you want to have a good credit history to show for it.