Debt And Divorce

InCharge Institute of America, Inc.

If you've recently been through a divorce or separation –- or are facing the possibility –- there are several urgent issues to consider when it comes to credit. Understanding the following points can help you make good If you've recently been through a divorce or separation –- or are facing the possibility –- there are several urgent issues to consider when it comes to credit. Understanding the following points can help you make good decisions and prevent credit disasters.

• Get a copy of your credit report so you'll know where you stand from the start. It's also a good idea to obtain your report sometime later in order to confirm the accuracy of any changes made to your credit file.
• Make sure you know the status of your credit accounts. Are they individual or joint accounts? If you choose to maintain joint accounts, be sure to make regular payments to prevent negative entries to your credit record. Additionally, creditors can report negative information to a credit bureau if your ex-spouse skips payments. In this case, you'll likely have to pay, or face possible legal action from the creditor.
• You and your spouse are responsible for all outstanding balances on joint accounts, whether you're married, divorced, or separated. This includes credit cards, car loans, and home mortgages. Even if a judge orders your ex-spouse to pay a bill, the responsibility is still yours to ensure it is paid because you agreed jointly to pay off that debt initially.
• In the event of divorce, strongly consider closing any joint accounts that include your former spouse as an authorized user. It's also important to communicate with your ex-spouse as to who will be responsible for which debts. Contact your creditors to convert these accounts to individual accounts (in the name of the person you decided to be responsible for those debts). Keep in mind, though, that unless the creditor agrees to free you from that debt, you will still be legally responsible to pay the existing balance.
• A creditor can close a joint account if requested by either spouse. By law, though, creditors cannot take it upon themselves to change the status of the account.
• When you do start out on your own again, establish independent credit by getting a credit card with a small limit and paying all bills on time. This will help you rebuild a positive credit history in your own name.

While there are certainly many other priorities during your divorce proceedings, attention to credit details will help you build a successful future on your own.