The financial costs of divorce are almost always high, so when divorcing, you will want to take every measure possible to protect your credit rating, especially if your financial history has not been stellar. The simple splitting of one household into two incurs additional costs for both parties, and when you add on attorney’s fees, financial difficulties often result. Here are suggestions on surviving a divorce with your credit intact:
• If your divorce is a simple one – no children and few jointly owned assets – you can always try a pro se (do it yourself) divorce. Check with your local Bar Association (www.nolo.com is another good resource as well) for assistance with paperwork.
• If you are still able to communicate in a civil manner with your spouse, you could use a mediator or try a “collaborative” divorce. You could also consider sharing an attorney.
• Do the necessary research to make sure all the monies are counted and split evenly during the divorce so there are no hidden accounts or money stashed away that you are entitled to a share of.
• Watch the bills during the separation period and make sure your spouse is not accruing high bills on joint accounts. Remember, if your name is still on an account, you will be responsible for the bill, even if your spouse (soon to be ex-spouse) is the one who charged the bill.
• Close all joint accounts as soon as possible. You may need to zero out several accounts so you can close them, but you can sometimes do this by opening an individual account and paying off the balance of the joint account with money from the new account. Whatever you do, try to get your name off any account your spouse may still be charging money on.
• Do not take on financial responsibilities just because you feel guilty or emotional about the divorce. While you may just want to get out of the situation quickly right now, you will most likely regret taking on that extra financial burden later, especially if you end up paying bills you know are not really yours.
• Separate your debt from your spouse’s debt, including the mortgage. Mortgages present a special challenge because of the large invest involved and the larger sum of money at risk. Many times one spouse wants to keep the house, but does not have the money to buy out the other spouse. It’s best to get your name off the mortgage, even if your spouse is staying in the house, because if your name stays on the mortgage and your ex stops making payments (even years after your divorce is final), you will still be responsible for those payments.
• If you remain on a joint account with your ex (for example, the mortgage), be prepared to make the minimum payments each month even if the court order says your ex is responsible for the debt. Lenders don’t care what the court orders say – if your name is still on the loan, any lack of payment will still affect your credit rating. It’s better to make the minimum payments and seek restitution from your ex (even though court action, if needed) than to risk damaging your credit rating.
Remember that your credit rating will remain with you long after the divorce is over, so be careful to protect your credit during this stressful time of transition.
