Divorce isn’t pleasant for either party. While dealing with the emotions surrounding the divorce, the idea of entering the dating scene again, or starting a new life as a single person, financial issues can seem like an even larger problem to manage.
Don’t let finances be overlooked as you handle the relationship aspects of the divorce. When you separate or divorce your spouse, you need to protect your money and financial future as soon as possible. Here are actionable ways that you can keep your finances and credit intact during the divorce process.
Protecting Your Credit During Divorce
1. Close all joint accounts
If you and your spouse hold joint bank accounts, you’re equally responsible for them, especially any debts. Don’t risk your spouse accumulating more debt or making late payments. Because both of you are named on an account, both of your credit scores will be impacted by actions on the account itself.
2. Call your Creditors
Once your joint accounts have been closed, you should contact any remaining banks, lenders, or credit card companies about the divorce. Many institutions will require a certified letter. When you speak with the creditors, request a current account statement and let them know that you will not be liable for any debts after the date on the certified letter. You should also request the account be set as inactive. This will prevent any new charges from being made. Let them know that once any balances are paid in full that you would like the account to be closed entirely.
3. Request Monthly Statements
For any accounts that are currently outstanding, request that monthly statements be sent directly to you. You should also request this for accounts that are not able to be closed or accounts that will be remaining open. Keep an eye on the accounts and track that payments are being made on time.
4. Make a Decision about Owned Properties
Often after a divorce, women want to stay in the home especially if there are children in the picture. Depending on the housing market where you live, it may or may not be a great decision to keep the marital home. If the market where you live has consistently appreciating value, you may want to continue to build equity in the home. If you can afford to stay in the home and the market it good, you should consider doing so. However, if there is a large amount of debt in the home and you cannot afford it, it is more of a liability than an asset to you.
5. Keep Your Contact Information Up To Date
If you do move following the divorce, be sure that you submit a change of address request with the post office. You’ll want to ensure that your bills, financial statements, and any other important documents are being sent to your new residence. Missing payments on bills because you didn’t change your address is an overlooked way to damage your credit quickly.
6. Don’t Spend Money to Get Revenge
It’s common for people going through a divorce to try and “get revenge” on their ex-spouse by spending huge amounts of money on shopping sprees. This tactic will usually come back to haunt you financially or even in the divorce proceedings. Try to maintain your normal spending habits and get control of any debts that you have. A shopping spree during a divorce will likely be marked by a judge as marital debt and order the individual who did the shopping to be responsible for it.
7. Think before you use your credit cards
If you’re still using credit cards during your divorce, be wise about how you use them. Try to pay all of your credit cards on time, or at least make the minimum payments towards the balance. Don’t max out credit cards if you have large legal bills or other expenses that are divorce-related. A large portion of your credit score is based upon the credit card debt that you have. An individual with a high credit score will have low credit card debt. You’ll want to avoid any of your accounts from going to collections. For more information on removing collections from your credit report, read this blog post from Crediful.
8. Monitor Your Credit Reports
Once your divorce is completely finalized, you should continue to monitor your credit report. Check for any errors that might arise from the time you were married. There are many online options to request a free annual copy of your credit report.
If you believe you may be at risk for identity theft or your ex attempting to open joint accounts after the divorce is finalized, you should also consider utilizing a credit monitoring service, especially if your ex knows your social security number and other personal data.
9. Put a hold on any of your credit files
If you’re concerned about your ex going on his own revenge streak, you should put a hold on your credit accounts or a fraud alert. By doing so, any action that is made on your credit accounts will freeze your credit files and prevent your ex from opening new credit card accounts in your name or using your social security number.
10. Utilize civil court actions if necessary
Even if your ex was ordered to pay specific debts when your divorce was finalized, if they don’t pay you’ll want to pay off those debts or risk damaging your credit. While this doesn’t really seem like a fair situation, you can try and recoup the money by taking your ex to civil court for not following the court order.
After a divorce, both parties typically just want to move on personally and financially. If you can take action as soon as possible, you can mitigate potential credit and debt problems from adding more stress to an already stressful situation.