Credit Surprises for Divorcing Couples
May 25, 2016
Divorces can get messy. Many people do not factor in the affect it can have on your credit. Below are a few different nasty surprises that affect your credit while you are in the divorce process. The key is to be prepared beforehand:
Your ex might not honor court-ordered financial obligations.
Just because your soon to be ex is ordered to pay debts does not guarantee that they will do so. If an account bears your name, alone or jointly with your ex, you are legally responsible for the debt. This is where sometimes you end up paying the debt to preserve your credit and then you become a creditor of your ex.
Individual credit accounts are important.
Be sure you have your own credit card account. If all of your credit cards are held jointly and you close them, you could be left with no credit score at all. Your credit score follows your social security number, not your name.
Expect to lose in court.
Assume the worst financial outcome. Assume you will be starting over and your cash flow will be tight. Sticking to a budget is a great goal for anyone, but it is especially important for couples whose household is about to become separated. Overall costs go up after a divorce, not down. It is more expensive to run two households, not just one.
Without good documentation, you could lose big money.
Some partners deliberately rack up new debt on joint accounts or their partner’s accounts in order to cause financial harm. Some may even open up new accounts using their partner’s name and social security number. Avoid this by making your separation legal by filing the required paperwork where you live. Also close joint accounts and open individual ones that only you can access. Remember to also keep records of all account activity.
If you would like help during your divorce process with your financial situation, please contact us at 763-231-9510 to meet with one of our Certified Divorce Financial Analysts. We would love to help.