California Divorce and Family Law

Handling Debt After a Divorce

My former husband has lived in our old house since our divorce in 2004. Problem is, we never refinanced the house in his name only. Now he is five months behind on the mortgage. Can I get any of this delinquency off my credit report? Our divorce decree gave him full financial responsibility for the house, but it is still affecting me. I want to purchase a house this summer, and I am scared this is going to hurt me. Help!

Everyone I talked with about your question answered with the same two words: "Oh no."

Unfortunately, there's nothing you can do about the harm that was already done to your credit report. A divorce decree is an agreement between the divorcing couple, but "it does nothing to separate their assets, accounts or financial obligations," says Maxine Sweet, vice-president of consumer education for Experian.

Despite the decree, your name is still on the loan, so you're liable for all the payments, and the mortgage company is unlikely to remove the delinquency from your report.

You need to take action immediately, before the situation gets worse. Because your ex is more than 90 days late on the mortgage payments, your credit score has likely taken a major nose dive. If the bank forecloses on the house, you probably won't be able to buy a house for at least a few years, says Emily Davidson, of Credit.com.

All divorced couples should take note before they end up in a similar situation. "If you're relying on an ex-spouse to pay a debt that's in your name, you need to do something," says John Ventura, author of Divorce for Dummies and the director of the Texas Consumer Complaint Center at the University of Houston Law School. "It's a ticking timebomb."

You could help him with the mortgage payments until he gets back on track. But it's better to get out of the situation. Tell the lender about the divorce and ask if you can be taken off the mortgage. "Several of my clients have had luck getting this done without refinancing," says Chris Smith, president of Capstone Mortgage, a mortgage broker in Lexington, Mass.

If that doesn't work, try to refinance the house in his name only. But that might be difficult to do because of his late payments. "Most lenders will not lend to anyone with more than one 30-day late mortgage payment on their credit report in the past 12 months," says Smith.

Another option is to go back to court and ask the judge to order your former spouse to sell the property before it goes into foreclosure, says Ventura. Or perhaps your ex-husband would be willing to give the house to you and have you make the payments. You could rent it out until it's sold. "There is no easy solution to this problem," he says.

Divorcing couples should never rely on one spouse to pay a joint debt. Tackle the issue upfront by agreeing, for example, to have one spouse refinance within a certain time period or sell the house.

The answer is by Kimberly Langford in Kiplinger.com.

Minimize the impact of divorce on your credit

If you're planning to file for divorce this year or are already splitting your assets with your soon-to-be ex-spouse, your credit is likely to take a hit.

Many people don't realize that lenders do not honor court decrees that assign payment responsibilities for joint loans. The mistaken assumption that you're off the hook for financial obligations can result in a series of missed payments that may trash your credit score for years.

This needn't happen if you safeguard your credit before you file for divorce. Consider these tips from John Ulzheimer, author of "You're Nothing but a Number" and an expert at Credit.com, a consumer personal finance site.

If you have joint accounts with your spouse, do your best to turn them into individual accounts so that it will be easier for the divorce court to split up your financial responsibilities. To do that you will need your spouse's permission, which means you're going to have to let the cat out of the bag. But taking these steps now can save you years of credit woes later.

Begin by converting your credit card accounts. People most often miss payments on this type of debt, rather than the loans that keep a roof over their heads and wheels under their feet.

Next, work on refinancing your mortgage and your car loan. Granted, this is going to be more difficult, because the bank will want just one person to accept the loan in his or her name - which may not be possible if that person's salary isn't enough to qualify for the loan. In cases like these, it might be easier to sell the car or the house, split the money and move on. That way, you're guaranteed not to have credit damages caused by a vengeful ex-spouse.

"Remember that when you're getting divorced from your spouse, you're also divorcing yourself from emotional attachment to assets," Ulzheimer said.

You would also be wise to opt out of receiving pre-screened offers for credit or insurance. A spiteful ex-wife or ex-husband may be tempted to apply for a loan in your name just to ruin your credit. Go to the consumer credit reporting industry's official Web site for details: www.optoutprescreen.com/.

Finally, start planning for all this at least six months to a year before you file, or as early as possible before the divorce gets ugly. Once any problems begin, you and your embittered other half will have a hard time thinking logically. If this seems like a lot of work at the front end of your separation, remember that it will save you up to 10 years of credit-related headaches in the aftermath.

From the Mercury News.

Lessen impact of divorce on credit

If you're planning to file for divorce this year or are already splitting your assets with your soon-to-be ex-spouse, your credit is likely to take a hit.

Many people don't realize that lenders do not honor court decrees that assign payment responsibilities for joint loans. The mistaken assumption that you're off the hook for financial obligations can result in a series of missed payments that may trash your credit score for years.

This needn't happen if you safeguard your credit before you file for divorce. Consider these tips from John Ulzheimer, author of "You're Nothing but a Number" and an expert at Credit.com, a consumer personal finance site.

If you have joint accounts with your spouse, do your best to turn them into individual accounts so that it will be easier for the divorce court to split up your financial responsibilities. To do that you will need your spouse's permission, which means you're going to have to let the cat out of the bag. But taking these steps now can save you years of credit woes later.

Begin by converting your credit card accounts. People most often miss payments on this type of debt, rather than the loans that keep a roof over their head and wheels under their feet.

Next, work on refinancing your mortgage and your car loan. Granted, this is going to be more difficult, because the bank will want just one person to accept the loan in his or her name -- which may not be possible if that person's salary isn't enough to qualify for the loan. In cases like these, it might be easier to sell the car or the house, split the money and move on. That way, you're guaranteed not to have credit damages caused by a vengeful ex-spouse.

"Remember that when you're getting divorced from your spouse, you're also divorcing yourself from emotional attachment to assets," Ulzheimer said.

You would also be wise to opt out of receiving pre-screened offers for credit or insurance. A spiteful ex-wife or ex-husband may be tempted to apply for a loan in your name just to ruin your credit. Go to the consumer credit reporting industry's official Web site for details: www.optoutprescreen.com/

Finally, start planning for all this at least six months to a year before you file, or as early as possible before the divorce gets ugly. Once any problems begin, you and your embittered other half will have a hard time thinking logically. If this seems like a lot of work at the front end of your separation, remember that it will save you up to 10 years of credit-related headaches in the aftermath.

From Marshall Loeb in BND.com.

When Bankruptcy Meets Divorce

Just over two years ago, President George W. Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, which became effective Oct. 17, 2005. If you are getting divorced, this new bankruptcy law could concern you. Reason: While you may not realize it, in this country, our high divorce rate and bankruptcy commonly intersect.

Here’s how. Until the enactment of the BAPCPA, the bankruptcy process was seen by some, and used by many, as a tool to permanently evade (or, to use bankruptcy terminology, “discharge”) family obligations foisted upon them by agreement or court order after a marital dissolution. Plus, once a person filed a bankruptcy petition--for liquidation under Chapter 7 or reorganization under Chapter 13 (or, less commonly, Chapter 11)--he gained the protection of an “automatic stay,” preventing creditors from taking any actions against him, his income or his property to collect their debts.

Perhaps even more important than the means test and mandatory financial management education is the fact that BAPCPA has made it much more difficult for debtors to shirk domestic relations responsibilities. Unlike the old law (BRA) which, as amended in 1984, allowed debtors to discharge nonsecured property settlement obligations to former spouses (think payouts for businesses, professional practices, or other assets distributed in a divorce), the new law forbids this. Now, any domestic support obligation “DSO” becomes a “first priority claim,” ineligible for discharge. 

Still, scholars see potential areas of abuse. If you have a property agreement or divorce decree wherein your ex assumes existing marital debt (outstanding credit cards run up during your marriage) and agrees to pay the credit card companies directly--“holding you harmless” in the meantime--beware. That obligation might be subject to discharge or reduced payment under the new bankruptcy law. Why? Payments made to a third party, i.e., someone other than, “a spouse, former spouse or child of the debtor” might not receive protection under the new 11 U.S.C. 523(a) (15).

On the other hand, any obligation undertaken in a divorce, owed to a third party and in the nature of support (say, an ongoing mortgage or auto loan) is probably safe from discharge under BAPCPA. Best idea: Insist on having your spouse pay old, nonsecured consumer debt, directly, from his--or her--share of money received from the sale of a house or distribution of other assets at the time of the divorce. A promise to pay is nice, but security (or cash) is king.

BAPCPA also provides “domestic support obligations” first priority status over other nonsecured debt. (But, this fact might not be as useful as it sounds as BAPCPA expands the reach and strength of secured creditors. So, it’s possible less will be left for all unsecured creditors, regardless of priority status.) Furthermore, the automatic stay provisions of the code no longer apply to divorce or support actions filed in state courts. Though you won’t be able to divide the debtor’s property, you will be able to address support, domestic violence and custody matters without having to appear in federal bankruptcy court to “lift” the stay.

Also, under BAPCPA, a bankruptcy filing won’t affect your rights to receive support via wage garnishment or other common collection means. Likewise, pre-filing payments of domestic support obligations to a spouse (so-called “pre-petition transfers”) won’t be “voidable” as preferential payments. Plus, per BAPCPA, no payment plan debtor will receive an order of discharge until he or she confirms that all domestic support obligations are current.

What’s more, BAPCPA requires a debtor to reside in a state more than 40 months before he or she files for bankruptcy protection to take advantage of that state’s exemptions; thus eliminating “forum shopping,” where debtors moved to states like Florida or Texas just before filing bankruptcy petitions, in an effort to convert nonexempt property into an exempt homestead, wiping out their nonsecured debt in the process.

So much for the debtor. As a DSO creditor in the age of BAPCPA, you will receive notice from the trustee of your rights to collect support through federal enforcement agencies. You will also receive the most recent address of the debtor, where he works and details about other affirmed creditors remaining after the bankruptcy action.

While BAPCPA can make life more difficult for those who have suffered from sudden unemployment, sickness or other misfortune, it’s probably the best thing to have happened to unsecured divorce creditors since 1898. Still, BAPCPA is recent law and courts have yet to settle all the issues arising from its new provisions. If your ex files for bankruptcy protection, consult with an expert. Ask how to protect your DSO (domestic support obligation) creditor’s rights by filing any necessary adversary complaints or proofs of claims. For instance, under a Chapter 13 plan, a debtor can still escape paying some, or all, accumulated support arrears, so you must be vigilant.

And, don’t forget to obtain copies of all the debtor’s bankruptcy schedules (disclosing his income, real and personal property, and the like). As BAPCPA provides the possibility of using exempt property to collect what you are owed as a nondischarged creditor, these schedules will be a rich source of useful information. Happy hunting.

Read more at Forbes.com

After divorce: moving onward and upward

The fallout from divorce comes in many forms: emotional, practical, familial, all of them potentially devastating. But when it comes to your financial future, you can move on positively toward security and success.

After you've extricated yourself from any loans, bank accounts and credit cards you may have shared with your ex, you can turn your attention to building up your assets and financial security. Here are three ways to prepare yourself for a fearless, confident future:

1.Build an emergency fund. OK, so you're still feeling raw and maybe a little scared to go solo. Focus on giving yourself a security blanket. Figure out how much you would need to live on for eight months, and then sock that amount away in a savings account. Once you have those savings, you'll be taken care of no matter what happens — a layoff, a loved one's illness, etc. If you received a payout in the divorce, you may have your peace-of-mind fund already. If not, don't stress. Just set up a monthly direct deposit — have the money transferred from your checking account into a savings account.

2. Get the match. If you work for a company that offers a 401(k) or 403(b) retirement plan and kicks in a matching contribution, you must join and contribute enough to get the match. I've said it before: That matching contribution is no different from a bonus. If you find your plan's menu of fund choices intimidating, see if it offers an all-in-one fund (it's typically called a life-stage fund). This is geared toward your age and will have a mix of stocks and bonds appropriate for you. If there's no such fund, look for an index fund that mimics the performance of a large basket of stocks, such as the S&P 500 or the Wilshire 5000.

3. Fund a Roth. If your income is below $95,000 a year, you're eligible to fully fund a Roth IRA (this year you can put in $4,000 if you're under 50 and $4,500 if you're 50 and over). Assuming you have at least 10 years until you retire, a no-load index mutual fund, such as the Vanguard Total Stock Market Index fund, is a great choice. You don't get a tax break when you invest in a Roth, but when you retire and pull the money out, there will be no tax on your contributions or your earnings. So think of your Roth as a standby emergency fund.

Read more at the Ventura County Star.

Credit Card Debt After Divorce

It is true that marriages are made in heaven. But everything falls flat on their butt once a marriage hits the rocks. Every bit of reconciliation fails and divorce seems to be the only way out. If everything – both financial and other aspects - is settled before parting ways, then we can say - all is well that ends well. But if the separation is not so amicable and there is some sourness left somewhere in terms of an unsettled financial debt, things can turn both ugly and complex.

One such difficult situation arises when one of the partners incur a credit card debt, and the credit card debt after divorce assumes the form of a Damocles sword in the form of collection people, constantly nagging either of the ex-spouses to settle the due. The situation is a bit tricky here because whether the person who incurred the debt or the other ex-spouse has the real responsibility of making the payment is still not defined clearly by the law. The situation gets more complex when it comes to joint accounts. But let us see the credit card debt after divorce now.

Credit Card debt after divorce – mostly in joint credit cards – is generally seen by the creditors as the joint responsibility of the couple. Actually the spouse who didn’t incur the amount is not liable to pay, but the credit card company may seek payment from both the parties as they care only about the money due to them. What settlement had been reached after divorce is of little interest to these people.

One may feel that closing out credit card accounts (joint) is a solution to all these problems. If you have a responsible spouse, well this will work. But the fact is that the account does not cancel itself until somebody makes the payment. Also, after divorce, it is legally not practical to divide the debts. Hence these are some practical solution, from best to worst.

- Sell any joint asset (say, home) and pay the debt and close the account. It is a classic example of killing two birds with a stone.

- Separate credit cards can be a better option in such a situation. After applying, get the dues transferred into individual cards, divided according to your own logic or the way you spent.

- In this regard, if one of the spouses is not qualified to get a card, get one of the relatives to cosign the card before transferring the share of balance. But, rather than being through this ordeal, the best option is to get yourself everything settled before divorce. It is always a pain to go behind all these joint issues when you are about to start a new life.

Thanks to Best Syndication for this article.

Advice for Couples Headed for Divorce After Bankruptcy

Staying married is tough. That's one of the reasons so many people give up.

But staying together after a bankruptcy is really tough. Not only do you have your personal issues to work through, but you're constantly getting conflicting financial advice that can put you deeper in the hole.

My wife and I made a promise early on in our bankruptcy that the "D" word wasn't allowed to be uttered in our home.

It must have helped.

Although neither of us has been divorced, we were headed in that direction on a few occasions. There was the time in 1995 that Michele stayed in a hotel overnight without telling me where she was. That was a real wake-up call.

But what would I have done if divorce had ever been an option?

I would have started by reading Mistake 24 on page 47 in Do You Make These 38 Mistakes with Your Credit? Here's what it says:

"A divorce decree does not change the fact that you are a co-borrower on a loan. What typically happens is a couple divides their debt with no regard for who is legally responsible for the debt. Each person is still responsible regardless of what the judge says.

Both co-borrowers will suffer if one borrower defaults. So it's best to assume responsibility for all debt for which you were a co-borrower. This will ensure your credit is not negatively affected.

If you are unable to assume responsibility for all co-borrowed debt, it's best to close the accounts.

If you have accounts that you cannot close, refinance them to put them in one person's name. Closing accounts in this situation is the lesser of two evils. It will lower your scores, but it's better than repeatedly making late payments (refer to Mistakes 11 and 36).

You should also contact your lenders to determine what other options you have."

As I said, a divorce decree doesn't change the fact that you are responsible for any credit held jointly.

When you open joint accounts you and your partner sign a legally binding agreement holding both of you responsible for the account. The divorce decree is another binding agreement between two people who consent to divorce. It does not change previous agreements between you and other creditors. It doesn't matter to the creditor who actually made the charges (if it's a credit card). It doesn't matter who agreed to pay in the divorce decree. And it certainly doesn't matter to the creditor that you're getting a divorce.

The creditor will try to collect from both borrowers. A word to the wise, don't sign a divorce petition until everything with your jointly held credit is worked out. Promises to fulfill at a later time or by a certain date can be overlooked and expensive to enforce.

What I mean by "worked out" is that all credit held jointly is closed, refinanced into individual names, or paid off to eliminate the debt. "Worked out" does not mean that your ex-spouse has signed a promissory note or some other legal document promising to pay off debt. An irresponsible or vengeful ex-spouse can wreak havoc on your credit rating for years after a divorce. It's legal harassment in its truest form.

Bottom line: the best advice I can give you is…

…do not sign a divorce decree until all credit matters are resolved. Signing the divorce decree should be your trump card and a very good reason to make things happen your way. What I've gleaned from divorced couples I've talked with is that they believe signing papers at the lawyer's office resolves everything. It doesn't. You need to truly resolve matters, which, as I wrote above, means get your name removed from everything jointly held before you sign the divorce papers. That could mean refinancing, creating individual accounts, paying off debt, closing accounts, or whatever it takes.

The last thing you need are late payments appearing on your credit reports after your bankruptcy is discharged. A series of recent late payments can cripple your chances of getting low interest rates after bankruptcy and keep the dark cloud of bankruptcy hanging over your head well after it should.

If you plan ahead and pay close attention to credit accounts held jointly, you can ensure that your credit reports and FICO credit scores won't get damaged any worse. This is something that your divorce attorney will never tell you about. It's not their area of expertise. They simply don't know what kind of impact a divorce will have on your credit reports and credit scores. And frankly, they don't usually care.

When you're married, it's often easier to just make all accounts joint accounts. Many of us do it without even thinking. However, if you can both agree to have separate accounts in addition to your joint accounts, it can potentially save months and years of frustration for both of you if you do get divorced--or, for that matter, if there's an unexpected death, disability or layoff.

Another situation where things can get sticky is when your ex-spouse files bankruptcy and you don't. The creditors of jointly held accounts that your spouse filed bankruptcy on will come knocking on your door for payment...and eventually may push you into filing bankruptcy (if you haven't already) regardless if the debts that the spouse filed on were in the divorce decree. Be aware that your spouse's negative narratives may appear on your credit reports and damage your credit. I talk about negative narratives on page 55 of Do You Make These 38 Mistakes With Your Credit?

Here are some credit tips to help you through a divorce:

# Close joint accounts before you separate or divorce to prevent your former spouse from running up charges and leaving you responsible for the balance. Closing accounts is the lesser of the two evils in this situation. Closing accounts before you separate will make it easier since your spouse is more likely to cooperate with you. Some financial institutions will require the primary account holder to close the account. If that's not you, then you're going to need the help of your soon to be ex-spouse.

# Establish separate accounts, such as credit cards, gas cards and retail cards. This ensures that both parties are individually responsible for their own accounts, which is valuable in a divorce. The crown jewel out of this is you won't have to worry about re-establishing credit on your own...because you will already have it.

# Arrange new individual lines of credit with the same lenders to replace each joint account and transfer agreed upon balances to those new accounts. You want to avoid paying any new charges your ex-spouse makes.

# Some creditors will require you to pay off the account before they put it in an individual name. If you cannot pay off the balance, at least try to close the account to prevent any new charges .

# It may be wise to have an attorney involved if creditors refuse to cooperate with you. The first thing your attorney will need is a copy of the agreement you signed with the creditor. There are several legal service plans that are cost-effective for this sort of thing.

# Try settling the account with the creditor directly by paying a smaller amount than what is owed. The threat of bankruptcy could help your plea. Just be sure you get promises in writing from the creditor. Also make sure they will not report or try to collect on the deficiency balance.

# Pay the jointly held bills yourself--then go after your spouse for the money owed.

Of course, you should also find a good and trustworthy lawyer (good luck!) to help you. Obviously, I'm not a lawyer. And none of what I just wrote should be misconstrued as legal advice. My focus here your credit rating.

From The American Chronicle.

Play debt card carefully during your divorce

Q: I am considering divorce. My husband is 64, on the verge of retirement. I'm 20 years younger and working two jobs to pay off debt that was built by both of us. The card was in my name only. I'm considering filing for divorce to force him to give me some money toward the outstanding balance. He's been putting all his money in investments in his name only and I'm carrying the debt. Should I not pay it at all and look for legal action? -- Nancy

Dear Nancy: Although divorcing over money issues is very common, I always have a hard time getting used to it when I hear someone is going down that road. The loss of dreams, time and, yes, money is very sad indeed. My primary recommendation is to try to communicate with your husband about your level of frustration and his pitching in to help pay the debt. You might gently (or not, considering the stakes) remind him that the balance on the credit card is due to purchases from which you both benefited and that you are working a second job to keep up with payments.

Don't forget to look at it from his point of view, as well. He may be paying for other things and thinking he is doing his part in the marriage.

If you have already tried to reach an agreement with your husband about paying off the debt, to no avail, here are some suggestions. First, stop using the card. Second, get a new card that you will use for just stuff that applies to you alone. Third, ask him to get a joint card with you for future purchases that benefit both of you.

I do not have good news for you regarding your idea of stopping payments on the debt. Since the card is in your name only, the one hurt most by not paying the bill will be you. It will negatively affect your credit, not his. If you believe divorce is in your future, you will want to protect your credit as best you can. Property, assets and debt are split up in a divorce, so you need to be careful and minimize any potential financial damage.

Let's look at what might happen if you stop paying the credit-card debt. Consequences of not paying:

• Due to universal default clauses on many credit-card accounts, late payments to one account can mean much higher interest charges on all your other accounts.

• Your credit score could take a serious dive. Payment history accounts for about one-third of your score. Recent late payments lower your score more significantly than older late payments and the longer an account goes unpaid the more points you lose on your credit score.

• A lower credit score could mean difficulty obtaining a lease or mortgage if you will be changing residences in the divorce or higher insurance payments.

• Nonpayment could result in you being sued by the creditor, which could result in you owing legal fees on top of the debt and a judgment that would allow the creditor to garnishee your present and post-divorce wages, put a lien on your home or consider other means to legally collect the money due. I would encourage you to have a heart-to-heart talk with your husband.

At 64, I hope he would know that avoiding marital conflict and divorce has real value. Plus, if he knows how upset you are, and he really cares for you, a solution may be in the offing. If he is an insensitive dweeb, contact an attorney if you are seriously considering divorce and find out what legal recourse you have to get your husband to pay his portion of the debt. In the meantime, keep paying your credit-card bill.

Q and A from the Portsmouth Herald.

Protecting Your Credit During Divorce

When a marriage ends in divorce, the lives of those involved are changed forever. During this time of upheaval, one thing that shouldn’t have to change is the credit status you’ve worked so hard to achieve.

Unfortunately, for many, the experience is the exact opposite. Unfulfilled promises to pay bills, the maxing out of credit cards, and a total breakdown in communication frequently lead to the annihilation of at least one spouse’s credit. Depending upon how finances are structured, it can sometimes have a negative impact on both parties.

The good news is it doesn’t have to be this way. By taking a proactive approach and creating a specific plan to maintain one’s credit status, anyone can ensure that “starting over” doesn’t have to mean rebuilding credit.

The first step for anyone going through a divorce is to obtain copies of your credit report from the 3 major agencies: Equifax, Experian®, and TransUnion®. It’s impossible to formulate a plan without having a complete understanding of the situation. (Once a year, you may obtain a free credit report by visiting www.AnnualCreditReport.com.)

Once you’ve gathered the facts, you can begin to address what’s most important. Create a spreadsheet, and list all of the accounts that are currently open. For each entry, fill in columns with the following information: creditor name, contact number, the account number, type of account (e.g. credit card, car loan, etc.), account status (e.g. current, past due), account balance, minimum monthly payment amount, and who is vested in the account (joint/individual/authorized signer). Now that you have this information at your fingertips, it’s time to make a plan.

There are two types of credit accounts, and each is handled differently during a divorce. The first type is a secured account, meaning it’s attached to an asset. The most common secured accounts are car loans and home mortgages. The second type is an unsecured account. These accounts are typically credit cards and charge cards, and they have no assets attached.

When it comes to a secured account, your best option is to sell the asset. This way the loan is paid off and your name is no longer attached. The next best option is to refinance the loan. In other words, one spouse buys out the other. This only works, however, if the purchasing spouse can qualify for a loan by themselves and can assume payments on their own. Your last option is to keep your name on the loan. This is the most risky option because if you’re not the one making the payment, your credit is truly vulnerable. If you decide to keep your name on the loan, make sure your name is also kept on the title. The worst case scenario is being stuck paying for something that you do not legally own.

In the case of a mortgage, enlisting the aid of a qualified mortgage professional is extremely important. This individual will review your existing home loan along with the equity you’ve built up and help you to determine the best course of action.

As a fellow member of the Divorced fraternity, The President of Victory Mortgage Lenders, also went through a Divorce. When it comes to unsecured accounts, you will need to act quickly. It’s important to know which spouse (if not both) is vested. If you are merely a signer on the account, have your name removed immediately. If you are the vested party and your spouse is a signer, have their name removed. Any joint accounts (both parties vested) that do not carry a balance should be closed immediately.

If there are jointly vested accounts which carry a balance, your best option is to have them frozen. This will ensure that no future charges can be made to the accounts. When an account is frozen, however, it is frozen for both parties. If you do not have any credit cards in your name, it is recommended you obtain one before freezing all of your jointly vested accounts. By having a card in your own name, you now have the option of transferring any joint balances into your account, guaranteeing they’ll get paid.

Ensuring payment on a debt which carries your name is paramount when it comes to preserving credit. Keep in mind that one 30-day late payment can drop your credit score as much as 75 points. It is also important to know that a divorce decree does not override any agreement you have with a creditor. So, regardless of which spouse is ordered to pay by the judge, not doing so will affect the credit score of both parties. The message here is to not only eliminate all joint accounts, but to do it quickly.

Divorce is difficult for everyone involved. By taking these steps, you can ensure that your credit remains intact.

Thanks to The American Chronicle.