4 Ways to Protect Your Credit During and After a Divorce
Despite being in a partnership, it is always good to maintain your own sense of independence and that includes having your own finances. When things are on the rocks, it’s understandably difficult to divide and assign who gets what or what belongs to who.
We feel that maintaining an open discussion with your spouse is essential when it comes to managing your credit to avoid any unfortunate legal issues later on.
It can start as simple as keeping your own bank account separate from your shared account and keeping track of what you consider personal expenses as opposed to joint ones.
Read on for additional tips on how to begin organizing your finances to protect you and your spouse, just in case.
Going through a divorce isn’t just an emotional challenge, it’s a logistical one, too. But while you’re sorting out who gets what, it’s important to make sure that you’ll be able to land on your feet financially and won’t be saddled with your former spouse’s debt. Here are four ways to protect your credit during a divorce.
1. Understand your responsibilities
Unfortunately, a divorce doesn’t affect your responsibility to pay off a joint debt. For example, if you co-signed a credit card with your spouse and the spouse takes over the card after the split, you are still legally on the hook for any debts he or she incurs on the card. If your ex falls behind on the payments, it’ll impact your credit score — and you might end up having to go to court. Moreover, depending on state laws, collections agencies might still be able to try to collect debt even after it’s off your credit report.
Generally speaking, a divorce decree is an agreement between you and the courts, not you and your lender. You’ll have to go through every joint credit card account, cancel it, and transfer the remaining balance to a card in the name of whoever’s assuming responsibility for the debt.
2. Open your own checking account
As unlikely as it may seem, there’s always a chance that your spouse might do something to ruin your finances, like draining a joint checking account. To keep yourself covered, open a checking account in your own name (if you don’t already have one) and start depositing your paychecks into that account.
While you’re at it, make sure that all automatic payments for the credit cards and bills in your name are coming out of your own checking account, so you aren’t hit by late-payment fees once you close the joint account.