Credit and Divorce: 2 Proven Ways To Protecting Yourself During Divorce

If you are going through the personal turmoil of divorce, many times the last thing you want to have to deal with is situations that require you to pay attention to financial realities. However, you really owe it to yourself to do so, because if you don’t you could find yourself suffering unduly from credit problems that aren’t even your fault. There are two main things you need to understand about your credit and divorce:

Understand your divorce decree fully – One of the biggest mistakes people make regarding credit and divorce; people assume that any divorce judgment means only the spouse named as being responsible in the decree needs to assume responsibility for the debt. However, this is not the case! Since the debtor never was legally a party to your divorce, they still are able to legally hold either of you responsible for the debt. This can cause problems when one spouse (maliciously or not) starts making late payments on something both people are responsible for.

Divest shared accounts – The first thing to do on your list should to divest yourselves of your largest shared assets. These can include the following:

  1. House – The best option for both parties is to complete the sale of the home before the divorce occurs; this way, there is no opportunity for one spouse to hinder the sale or drag it out, making it unlikely that the house could be used as something to damage your credit. If you are unable to sell before the divorce, the next best thing is for one spouse to completely assume sole financial responsibility themselves, through refinancing. Make sure that they actually are approved! Sometimes, after a divorce, one spouse is no longer financially able to qualify for loans, and may be denied. If that also is not an option, you just have to take responsibility and step up to see that payments are made on time, no matter who is “responsible” for them, unless you want to see your own credit damaged.
  1. Car – For most couples, this is their second biggest financing, after their homes. This makes it an obvious second target to take care of when separating yourselves while taking care of your credit and divorce. You basically want to follow the same process and preference that you did regarding your home (if you had one). Sell before the divorce if possible, have one primary party completely refinance in their own name, or accept the fact that you need to monitor the payments or risk your own credit worthiness.

If you focus on taking care of these two things, you will find yourself in better shape than virtually everyone who goes into divorce unprepared. The important thing to realize about dealing with the whole process and reconciliation of credit and divorce is that mistakes can happen; you both are human. However, you don’t want to be held responsible for the mistakes of another person, no matter their reason. Taking care of your credit responsibly even during divorce is definitely a smart thing to do.

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