A divorce is a stressful time for both parties, especially when it comes to finances. The good news is your credit score won’t be affected by the divorce and credit bureaus always have separate reports on both spouses.
You should also consider taking these five steps to protect your credit:
1. Secure Legal Help
Even if your divorce is an amicable one, a good divorce lawyer Jacksonville FL will help mitigate any unforeseen complications. Your lawyer will also guide you on how to handle joint accounts. The state of Florida has specific laws on joint finances and joint debts as well changing the status of these accounts. Your attorney can coordinate with your ex-spouse’s lawyer about any steps to take or how to go about consent orders that have to be addressed to minimize any credit damage.
2. Pull Up Your Credit Reports
It’s a good idea to pull up your credit reports as soon as you start discussing divorce or once you separate. Secure copies from the three major credit bureaus – Equifax, Experian, and TransUnion. You get a free copy of your credit report if it has been a year since you received a notification from those companies. Go over your reports carefully to check which debts are in your name. It’s also a good idea to monitor your credit score.
3. Separate All Joint Accounts Immediately
You should also take steps to separate joint accounts and joint debts. You will need the advice of a good lawyer on this as debts wherein you’re a co-signer requires the lender’s consent. Agreeing with your partner that they’ll be responsible for it won’t absolve you of the obligation.
There are several options open to you on this. You can either use your joint account to pay down your debts or transfer a joint credit card debt to a single card in the name of the party who will be shouldering the payments. You can also refinance collective properties or vehicles in the name of the person who will keep them. Assets can also be sold, and profits split between the two parties.
Taking these steps will go a long way in reducing the stress caused by the divorce. But it’s vital to consult a divorce attorney first.
4. Think About Freezing Your Credit
You should take your ex off as an authorized user on any personal accounts that they’re allowed to use. You can also freeze your credit to protect your finances, especially if there’s the possibility that the divorce will get messy. Your ex-partner will probably have access to your personal information, like your Social Security number, and they can take out a credit line in your name.
They won’t be able to do this legally, and you won’t be responsible for any fraudulent charges in the end, but your credit might take a blow. If you’re concerned about this happening, consider freezing your credit to prevent anyone from opening a credit line in your name. You can pay a company to handle this for you, or you can personally contact each credit bureau. You can request for the hold on your credit to be lifted once everything is settled. You can then apply for a new credit card or loan.
5. Make Sure It’s Clear Who’s Responsible for Which Debts
Your divorce doesn’t cancel out your original contract with your lender as it’s an agreement that states who’s responsible for the debts. You and your ex-spouse remain legally accountable for joint debts acquired during your marriage. It is why separating your accounts as soon as possible is a good move.
Make sure it’s clear to all parties involved who’s responsible for what debt, and try to settle the ones you’re responsible for as soon as you can. However, you should also keep watch over debts that your ex is in charge of. Your credit score will be affected if they don’t pay on time, especially if it goes to collections.
Luckily, there are steps you can take to protect yourself. One would be to call the lender and explain the situation. Perhaps they can find a way for you to update the debt. But be honest and tell them if it’s beyond your capability. The lender could still coordinate with you or your former spouse to design a better payment plan that would keep both your credit scores stable.
Divorce is tough, even if it’s amicable. You have to take care of yourself emotionally, physically, and financially. How stable your financial future will be could depend on the steps you take now to protect your credit during this very stressful time.