A divorce will, most likely, affect every aspect of your life. Unfortunately, your finances are not excluded from this. While many people understand that the legal proceedings of a divorce can add up quickly, some neglect to consider the other financial complications that arise due to a divorce.
If you are like most couples, you and your spouse probably combined all of your income, savings, and assets when you got married. Some couples choose to keep separate accounts in addition to these joint accounts, but most keep the majority of their funds in accounts that are accessible to both of them. This usually applies to credit card accounts as well.
While there are certainly benefits to having these joint accounts, a divorce can complicate things fairly quickly. Even if legal arrangements are agreed upon in a divorce – to settle, for example, who will make which payments – missed payments or other defaults could end up affecting the credit score of both parties, even the one who is not technically responsible.
So how can you make sure your divorce doesn’t leave your credit in shambles? Here are a few tips that will help you make sure you stay on top of your financial situation even during a divorce.
1. Take inventory. You need to be fully aware of your financial situation right from the beginning. Go over all sources of debt, including your mortgage, credit cards, auto loans, and other loans. Consider both individual and joint accounts. Make sure you understand and document the amount that is owed and to whom it is owed.
2. Change your status with your creditors. In cases of joint accounts for which you are not the primary debtor, you may be able to contact the creditor directly and ask that your status on the account be changed. Depending on how much is owed, what type of account it is, etc., this may not be possible, but if it is, it will be worth it. This is something you could also discuss with your lawyer, who can help you with the specifics of your case.
3. Don’t assume you’re in the clear. Do not stop making payments on any account until you are certain that doing so will not hurt your credit. Don’t assume, for example, that your soon-to-be-ex will take care of the payments, or that one phone call means that everything is cleared up. Talk with your attorney about how to be sure that you are no longer held responsible for those accounts.
4. Start again on your own. Start building your credit as soon as you can – with individual accounts. But remember to not bite off more than you can chew. Divorce is an expensive life event, and you need to make sure your finances are in order before you take on the debt of any kind. Make sure that your new income will support any new debts you incur. This will help you avoid bankruptcy and help you get the new start you are looking for from your divorce.
Divorce presents many individuals with the chance to find happiness in life once again. By making sure your finances are in order, you can help yourself find that happiness more quickly. Keep communication with your attorney open and honest. He or she will be able to help you assess your financial situation and keep your credit in good standing during and after your divorce.