Most people believe that a divorce is the worst thing that can happen to a household, that is until after the divorce and they see what it did to their credit rating. Divorcing couples should understand that divorce isn’t a division of everything, and that they will still be liable for a multitude of items.
For joint accounts, both divorcing members will be responsible for the balance. That means that just because your ex got the house, if they don’t pay their credit card off it will go on your credit as well. Both credit reports will suffer if one does not pay. Calling the credit provider may offer a bit of relief by changing the joint account to an individual account, or closing it off completely. This will keep a card with no balance from being maxxed out by an angry ex-spouse.
Consider closing accounts in your name where the other party is an authorized buyer. Again, this will keep cards from accruing charges where the angered spouse is seeking revenge. Divorce will divide property, but in the eyes of credit the two parties are still liable for all charges made on that credit service.
Individual accounts in community property states will be seen the same as a joint account. If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin, you and your divorcing spouse will be responsible for any and all charges made during the marriage; whether on a joint account card or an individual one. Also, the debts and history of payments will be seen on each other’s credit report.
Mortgages and home loans may require a refinancing to remove the spouse from the liability. Seek informed help in regards to commercialized loans.
A general to-do list for divorcing couples is to make sure you’ve pulled your credit and removed all discrepancies, close joint accounts and reclaim your name, open an individual credit account unless you live in a community property state, change your insurance beneficiary, check on your retirement savings and insurance to see if you are covered afterwards, and keep financial records for two years until all the dust has cleared. Divorce is a nasty business; but it is a business. Treated as such, both parties can come out of it a bit better off credit-wise.
For More Information
The FTC publishes a series of free consumer brochures on credit issues. You also can request a free copy of Best Sellers, a complete list of FTC publications, at: Consumer Response Center, Federal Trade Commission, Washington, D.C. 20580; (202) 326-2222. TDD: (202) 326-2502.