It is important for couples who are dissolving a marriage to be aware that in many situations, divorce may lead to credit issues. Fortunately, there are many ways that you can protect your credit and manage your debt during and after a divorce.
Most married couples have at least one joint financial account that they both have access to. This can make things easier during the marriage, but if a divorce in impending, changes are usually necessary in this area. An experienced divorce lawyer can walk you through the most prudent steps to take in your individual situation to lawfully protect your assets, and to shield yourself from responsibility for transactions made by your spouse if you are no longer together.
Paying Off Joint Credit Card Debt
Pay Up Front
If you don’t want to get caught having to make a spouse’s delinquent credit card payments on a joint credit card post divorce, it’s a good idea to pay off any debt associated with these cards during the divorce process.
If you are carrying a balance on any joint credit cards, you may want to consider paying them off during the divorce process if possible. Both assets and debts are divided during a divorce. If you have joint credit card debt acquired during the marriage and do not pay it off, then it is likely that the debt will be divided between you and your spouse. However, if your ex-spouse does not make the payments that they are supposed to, then the credit card company can pursue payment from you. Even if your divorce decree specifically states that your ex is responsible for paying the debts, the right of the creditors supersedes this agreement.
If this situation occurs, you can later take your spouse to civil court for the money that you paid on their behalf. However, the court process is stressful, time consuming, and expensive, so it is often best avoided if possible. Taking care of these debts as part of the divorce process can save you from potentially having to deal with these issues down the road.
Consider Your Credit Score
It is important to try to preserve your credit score during divorce. One important step in this area is to request a copy of your credit report and make sure that you have considered all potential debts during the divorce. For example, there may be a joint debt that you forgot about. If you fail to include the debt in your divorce agreement, then you may end up involved in the collections process, which can lower your credit score. You will also want to keep current on the monthly statements from your bank to make sure that you are aware of all the transactions, especially if your ex-spouse still has access to your account(s).
For many couples, the biggest financial hit during a divorce is the cost of having to maintain two households instead of one. Now instead of one rent or mortgage there are two, which means that you may need to cut back on your spending and reduce other expenses whenever possible. It may be difficult, but it can preserve your financial health for the future.
Establish Your Own Credit Card
If you only have joint credit cards, make sure to open your own credit card account before closing the joint accounts; having existing lines of credit will likely make it easier to establish a new one.