Before a divorce, during a divorce, & after getting a divorce you really need to concern yourself with credit… credit establishment, credit files & credit scores. There is more. Though divorce & credit is a concern for both men & woman, woman tend to have the greater credit difficulty due to societal standards. There is more. Therefore, I encourage woman of any age or marital status to learn as much as possible from this & other articles.

But for all men & woman, essential credit & financial matters must be addressed when contemplating a divorce in order for either and/or both parties to fiscally survive. Even if legally divorced, until finances are divorced, there is still a partnership as will soon be apparent. Here are some key points concerning credit that should be dealt with.

Joint Accounts – Joint Responsibility

The Federal Trade commission says: “If you are considering divorce or separation, pay special attention to the status of your credit accounts. If you maintain joint accounts during this time, it is important to make regular payments so your credit record will not suffer. As long as there’s an outstanding balance on a joint account, you & your spouse are responsible for it.”

If you divorce, you may want to close joint accounts or accounts in which your former spouse was an authorized user. Ask the creditor to convert these accounts to individual accounts. By law, a creditor can not close a joint account because of a change in marital status, but can do so at the request of either spouse. A creditor, how ever, doesn’t have to change joint accounts. There is more. The creditor can require you to reapply for credit on an individual basis & then, based closely on your new application, extend or deny you credit. In the case of a mortgage or home equity loan, a lender is likely to require refinancing to get rid of a spouse from the obligation.

SPECIAL NOTE: any time you open an individual account, you may authorize another person to use it… A creditor who reports (good or bad) credit history to a credit bureau, will report it in the file of any person you have named as “authorized user” as well as your own file.

BEWARE – Defaulting on a Joint Account

Regardless of any court decision, if one joint account holder defaults on a loan, I guarantee the creditor will not care who the court ordered to pay it… The creditor will definitely come after the other joint account holder. Even if declaring bankruptcy, a creditor will make every effort to reclaim their lost revenue or property from the surviving spouse.

Therefore be fully aware that if a creditor doesn’t agree to transfer joint accounts to an individual, then both of you’re still responsible for full repayment to the creditor, regardless of how you have agreed to split the bills in the divorce settlement. If a spouse fails to make a payment, a creditor will come after the remaining joint holder, regardless of any divorce agreement. Additionally both joint holders will have negative comments on their credit file regardless of fault.

Experian Offers Tips

Experian says, “There are many ways you can stop credit obligations from making divorce more hard – & reestablish your own distinct credit lines after divorce occurs. You may wish to consider the following:

1. Communicate with your ex-spouse. Make as clean a financial cut as possible.

2. Communicate with your creditors. Decide which credit belongs to whom, then ask each company & bank that extended you credit to transfer the debt to the name of the person who will be responsible.

3. During divorce negotiations, keep your joint bills current, even if you ultimately will have no responsibility for the debt. If you don’t, your creditors could become more reluctant to release one party from joint liability.

4. Ask the credit grantor to get rid of your spouse’s name as an authorized user or close the joint account to additional charges.

5. If your spouse runs up large amounts of debt, you should cancel as many of the accounts as possible. Inform all creditors, in writing, that you’re not responsible for these debts. There is more. This may not stop them from trying to collect, but it does show that you attempted to act responsibly.

6. Upon your divorce settlement, you & your ex-spouse might consider obtaining individual consolidation loans to cover your share of the joint bills. Pay off the joint bills with your individual loans & close all joint accounts. There is more. This helps ensure you will be responsible only for all those bills you agreed to pay. It also will often help you establish or reestablish credit in your own name. “

Other Points To Ponder

Though critically important for surviving this terrible time, emotions & so many other issues divert attention away from personal credit & its impact. Here then is a checklist & summary for a potential divorce in order to best protect your credit & rating.

1. Get a bank account in your name only.

2. Get at least one unsecured credit card in your name only. At a minimum get a secured credit card but in your name only. (This should occur whether divorcing or not.)

3. Ask to freeze any joint accounts with an outstanding asset or liability (bank, credit card, loans, etc.) so that both signatures are required before any transactions can be made.

4. Notify all creditors in writing (and call them) Document dates & who spoken to:

5. Have joint accounts closed if a zero balance or if possible have the account placed in the primary responsible party’s name only;

6. Instruct all creditors that you want all authorized users removed except the primary holder;

7. Inform all creditors you’re not responsible for charges from that point on if not in your name.

8. The primary party may have to re-qualify with the lender. This also means whoever will be responsible for a mortgage will probably have to refinance in order to get rid of the secondary party’s responsibility.

9. Get copies of your 3 credit reports & inform all credit bureaus when the divorce is final. Make every effort to separate your credit file from that of your former spouse.

MyVesta & Divorce.net

MyVesta.org adds the following great suggestions

“Make sure your name is listed on your utility accounts, an item often overlooked by many. When you go straight to get credit, they often look to see if you have a phone number in your name. If you don’t, even if you’re listed in the phone book at that number, it can be problematic.

“Before signing the divorce papers, consider one addendum: change of name authorization. Crazy as it seems, many states require your ex-spouse’s signature before issuing you a driver’s license or other ID in a previous or maiden name. Men who added hyphens during marriage could encounter identity trouble, as well.”

Divorce.net offers very fitting final thoughts.

“Your spouse may be in contempt of court for disobeying a court order that requires him [or her] to pay certain bills. However – if you’re jointly liable to a creditor as in the case of a mortgage or co-signed credit applications, your spouse’s contempt of court is NO EXCUSE for your non-payment. It simply is not a legally sufficient defense to say, ‘It’s no longer my responsibility because the court ordered my spouse to pay.’

_______________________

And from yours truly I add this. Until you’re financially divorced with your own credit established, you remain tied to your former spouse. Divorce isn’t the tidy little package some people would like to think it is. It’s not simply a matter of walking out one day. Over & above issues of child support & alimony, there’re other financial ramifications beyond the emotional ones. There is more. The greater the communication at these times on both parts, the less of an impact there will be to both parties & the sooner the final separation will occur.

Communication is critical in a marriage. It’s just as critical in a divorce.

Mike has been an Internet Guide/Writer in the field of Credit/Debt Management for over 10 years. His site was awarded Best Of Net by Forbes Publication from 2000 to 2005 with site visitation doubling to over 500,000 average views per month in the last year.

He has also offered debt elimination seminars to businesses & community colleges for the last 9 years. He has been interviewed on the radio a number of times & referenced in numerous publications. http://learncreditmanagement.com/