Divorce can, obviously, lead to a lot of emotional strain, but it unfortunately can cause a lot of financial problems as well. Shared accounts, cosigned loans and communal assets that once were a source of pride are now a major source of headaches. If you want to reduce those headaches as much as possible, the following 3 Tips are sure to help. Enjoy.
Tip 1: Don’t be fooled into thinking that Divorce Decrees end the financial responsibility that you have for specific accounts. These decrees, which the courts used to divide responsibility for shared debt, don’t carry over to the actual accounts that are used to pay for those debts and, since the financial institution that issued them has nothing to do with any agreements made by the court, your responsibility for paying them doesn’t change. These decrees also don’t change anything when it comes to how these accounts are reported to credit bureaus.
If you’re keen on avoiding problems after the divorce is finalized, all shared accounts should be closed and refinanced by the spouse made responsible by the decree to pay them. Until you actually change them through the financial institution that issued them, shared credit cards, mortgages and loans continue to be a joint responsibility and, sometimes, a joint problem.
Tip 2: Do your best to manage any shared accounts that can’t be changed. Mortgages, for example, can be extremely difficult to refinance quickly, leaving it up to you and your now ex-spouse to work together and manage that account. While this may be difficult it might make it easier to remember that both of your credit scores can be damaged if you can’t manage that account responsibly.
An easy way to do this is to set up an online account through which both of you can check on, and pay, whatever the loan happens to be. Signing up for automatic payments to have specific bills paid by the responsible spouse is also a good idea.
If you find yourself recently divorced and, for whatever reason, you’ve never built up your own independent credit history, an easy way to start is by opening your own credit card account, using it responsibly and paying it in full every month.
Tip 3: Be vigilant about Protecting your Identity. Unfortunately many couples go through divorces that leave them bitter enemies when everything is said and done. That being said, if you’re bitter ex-spouse has your specific financial details in hand, like your Social Security number, birth date and so forth, he or she could ostensibly steal your identity and destroy your credit quite easily.
One of the first things you should do is change any banking passwords that you have and ask your credit card companies and any banks you deal with the change your card and/or account numbers. Signing up for a credit monitoring program that alerts you to any changes to your credit data is also an excellent idea.
Unfortunately, a survey in 2005 indicated that nearly 50% of identity thieves were actually neighbors, close friends and/or relatives of the victim. Ouch.
Frankly, going through a divorce even the best of times is extremely stressful. Trying to make it through in one piece will be much easier if you don’t have to worry about your financial situation imploding, so do yourself a favor and, if divorce is imminent, start making the necessary plans to separate your finances as early as possible.