Getting divorced can be a great personal and financial challenge. During the process of negotiating a divorce agreement, it is crucial to ensure that you will be sound financially and not burdened by the debts of your former spouse.
Unfortunately, people are often quite unpredictable when times are stressful. Out of spite, a divorcing spouse may ruin the credit of the other by not meeting joint payment obligations. As a result, the spouse who needs to establish a financial identity will face problems doing so when applying to companies that provide credit cards, rentals, mortgages, and auto loans.
What’s the answer? Take control of your credit. The following will discuss four important methods for protecting your credit during a divorce. Consult a financial divorce specialist for the expertise you will need when planning your finances.
Know Your Credit Card Obligations
Getting divorced will not remove your financial obligations for jointly-held debts. If a married couple co-signed a credit card, both are responsible for all the debts incurred, even if only one spouse was holding the card and did all the spending. If he or she misses payments, it will affect the credit scores of both individuals. There may also be legal consequences followed by the attention of collection agencies.
In general, a divorce settlement agreement is between the divorcing spouses and the court. A lender is not a party. It is advisable to review each joint credit card account, request a cancellation for each, and then have the balance transferred under the name of the spouse responsible for the debt.
Personal Checking Account
Although it seems improbable, there is a possibility that an angry spouse may set out to harm your finances by withdrawing all the money from a joint checking account without your consent. If you haven’t done so yet, it would be wise to open your own individual checking account and have your salary directly deposited there, while making sure your own payment obligations start getting paid from that same account.
Part 2 will discuss two more important methods for protecting your credit during divorce.
Professional Guidance for Divorcing Individuals
John Faggio, CPA, CFP®, CDFA™, is a Financial Divorce Specialist. Faggio Financial helps divorcing individuals reach an equitable financial settlement in a professional, cost-effective, and expedient manner.
Faggio Financial does this by providing clients with financial clarity to a process that is inherently burdened with emotional issues and the stressors associated with the legal environment in which it exists. Call (410) 988-7333 for professional guidance today.