Divorce and Credit

Divorce and credit is very personal for me. After all, I started DuBose and DuBose out of my experience with bad credit following a divorce. But also, as a credit attorney, I see many clients with credit ruined by divorce. I recall one particular client whose divorce drastically hurt her credit.

divorceandcredit

During the divorce proceedings, she and her ex-husband agreed that he would continue to pay the Citi Bank card held jointly and all other remaining debts held jointly. They had been married for 5 years and incurred about $30,000 in marital debt. After the divorce, she thought everything was fine until she started receiving threatening notices from debt collection companies.

Apparently, her ex-husband paid all of the debts with the exception of the $25,000 Citi Bank Card account that was held jointly. Even though there was a divorce judgment that ordered him to pay the debt, he was now unemployed and unable to make the payments. Her credit suffered.

Dealing with a divorce is tough enough, but dealing with a divorce and credit that's bad is even worse. Don't let this happen to you.


Divorce and Credit - Steps to Take

  1. If possible, sell the house and get as much equity as possible to pay off any remaining debt held in your name individually or jointly. Try to avoid a divorce settlement agreement that requires debt elimination over time.
  2. As soon as you are aware of the divorce proceedings or anticipate a divorce, close any joint credit accounts immediately. This will prevent the debt from increasing even more during the divorce proceedings.
  3. If your ex-spouse is in agreement, transfer any joint account balances to a credit account held in your ex-spouse's name individually. Try to get as much of the debt out of your name as possible.
  4. Monitor your credit reports and credit scores monthly. Make sure that no additional debt obligations are incurred in your name. Also, sign up for identity theft protection. Believe it or not most identity is stolen by someone you know.
  5. Immediately notify all creditors of your divorce. This will put your creditors on notice that you are not responsible for any of the debts held in your spouse's name individually.
divorceandcredit

Divorce and Credit - Dealing with Creditors

Surprisingly, your creditors will not care that the divorce court may have ordered your ex-spouse to pay the debts held jointly or in your name individually.

If you are listed as a signer on the account, collection agencies and credit card companies will continue debt collection practices.

So your goal is to pay off your debts, before the divorce proceedings are complete, or get the debts out of your name. This includes utility bills, car loans, and credit card debts.

Hind sight is 20/20; but if you have already completed your divorce and your ex-spouse doesn't pay the debts that are adversely affecting your credit, you might need help to make a budget and debt management plan to evaluate your total financial situation.

You may consider a consumer credit counseling service or debt settlement company. If so make sure you know how to choose a debt settlement company or consumer credit counseling service.

I know it may be unsettling to deal with creditors for debts your ex-spouse may be legally obligated to pay, but in the long run it's probably worth it to protect your credit. Afterwards, learn how to fix your own credit or choose a reputable credit repair organization to help legally improve your credit.

By the way, if youre having problems in your marriage or considering divorce, you may want to get Christian Marriage Help from a couple that's been there and back. They've even got the T'Shirt to prove it! Go to www.marriageinspiration.com.

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