Before Divorce, Protect Your Credit

Protecting your financial reputation before a divorce. Most people do not think about their finances before a difficult decision as separation and divorce, but it is absolutely necessary. While you may not want to think about money when you are experiencing a traumatic life change such as divorce, being practical may save you from even more heartache somewhere down the road. Keeping your credit safe before a separation and divorce is critical. The following steps should be taken:

Document Everything — First and foremost document everything. Once attorneys and courts become involved make sure that all of your financial arrangements and agreements are documented. If there are any discrepancies, for example creditors wanting payment on something that your ex spouse owes, you can refer anyone to your official court records. While this may not be an exact science to get a collector off of your back in a timely manner, you will have the law on your side and the means to protect or restore your credit.

Take Note Of All Your Responsibilities — Be aware of all the accounts you are responsible for, including bank accounts, mortgage loans, credit cards and utilities. It does not matter if you and your soon to be exspouse have decided who will take responsibility for what. There has to be documented proof and arrangements made with each creditor that only (1) one name will be on the account. The person taking responsibility for the account.

Dissolve All Joint Accounts — It is a must to disolve joint accounts. Rather than trying to split the account and each spouse paying their portion, it is best to sever all ties. You should remove the right person's name from the accounts or cancel them completely. Make sure the both of you do the canceling together, legally. The first place to start is the bank, as most couples share checking and/or savings accounts when they are married. Also, if you are taking possession of one car with both of your names on the debt if there is a loan, have your spouse's name removed. Make sure that your spouse does the same thing with any property they take. In the event you are still paying for any of this property, then you may have to refinance to get the loan down to one name. Any bills you paid together, such as utilities, should be put in one name. With respect to credit cards, you can try to work with the credit card company and have them transfer half of the balance to two different accounts in anticipation of the divorce. This may not be easy, but it is a must.

Divide Any and All Shared Cash — In the process of determining debt, assigning debt and canceling credit accounts, you and your spouse will probably be left with some liquid assets. You should, with the assistance of your divorce attorneys, fairly divide the cash before your divorce is complete and you no longer have any contact. This much more sensible rather than quarreling after all is said and done.

Sell the House — A common well intentioned mistake is to give the house to one of the exspouses. This may be due to children being involved. Whatever the reason, it should not be done. The best thing to do is to sell the house together and divide the profit. After all, no one can predict the future. There are countless cases of divorcees having their credit ruined because their ex made late payments or let the house go into foreclosure all together. Explaining to creditors that you are now divorced will not make you any less responsible for a mortgage with your name on it.

Many things can come up in the events of a separation and divorce. The best protection against added anguish and dispaire would be to take protective measures with respect to your finances. Get the added advice of your attorney to deal with the debt that both parties has accumulated during the course of the marriage.

"There is no neutral ground in the universe, every square inch, every split second, is claimed by God and counter-claimed by Satan" -C.S Lewis

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