Take These 5 Steps to Protect Your Credit During Divorce
Just as there is an emotional side to every divorce, there is also a financial side. Countless men and women have found themselves in financial trouble after going through divorce court. Of course, living on one person’s income takes a financial toll, but many people also end up with shredded credit along with their divorce decree. And there is no time when good credit is more vital, since it will help you find a new apartment, secure a new mortgage, or even get a job.
Below, our Media divorce lawyers offer 5 tips men and women can take to protect their credit during divorce.
Close Joint Credit Card Accounts
It isn’t unusual for spouses to share a credit card account or a Home Equity Line of Credit. You need to shut down these accounts before your spouse runs up big charges. If you have a credit card, call the company to request that the card be closed. Realize that some will require that you pay off any balance before they will close the account.
Remove Your Spouse as an Authorized User
An account might be in your name, but your spouse is authorized to use credit. You should quickly move to take your spouse off, otherwise he or she could start spending without you knowing it.
Make Minimum Payments on All Accounts in Your Name
You want to avoid going into default, which will show up on a credit report and pull down your credit score. Consequently, you must make at least the minimum payment each month on all accounts that are in your name. If you don’t, you’ll suffer a ding to your credit.
This means you can’t count on your spouse making these payments, even if that has been the pattern you have developed so far in the marriage. Maybe your husband always picked up the car payment. Once you serve divorce papers, he might change his mind.
If you don’t know what accounts are in your name, pull a free copy of your credit history and check.
Consider Freezing Your Credit
Anyone with your Social Security Number and date of birth could open a credit account in your name. Your spouse probably has this information or can easily access it, so we recommend thinking about a credit freeze.
Once you freeze your account, no one can see your credit history without your permission. Lenders will not extend credit without checking a person’s history, so this can stop someone from committing identity theft. The Federal Trade Commission recommends that you contact each credit reporting agency separately.
Truly Divide Your Debts
A divorce decree should state who is responsible for which marital debts. However, this decree really cuts no ice with lenders. A basic rule of thumb: if your name is on the account, you are still responsible for the debt. This is true regardless of what is stated in your divorce decree.
To really divide your debts, you need to transfer debt into your spouse’s name only. This means that if he gets the mortgage, he should refinance the mortgage in his own name. If your spouse gets credit card debts, then a balance transfer can accomplish the same goal.
For Help Protecting Your Credit, Contact a Media Divorce Lawyer
Barbara Flum Stein & Associates has helped many couples divorce while maintaining their financial footing. Contact us today to schedule a free consultation.