Credit and Debit during a Divorce
Divorce in on the rise in the U.S. and it can have a tremendous effect on both your credit and your debt. With all of the emotions that surround this event finances can often become overlooked. Failure to take proper precautions now may result in damaged credit and high levels of debt down the road. Consider the following precautions.
Immediately make plans for separate joint accounts. Although this may not always be possible this is certainly the best course of action. If both parties agree, they can contact creditors and transfer the balances to individual accounts. This would preserve your credit in the event that your spouse does not make payments. Make sure payments are made even if you are unable to separate a joint account. The fact that a court has ordered your ex-spouse to pay does not change this fact even if they refuse to make payments you may have to instead.
If you have joint ownership you may want to consider a refinance to remove your spouse from the mortgage. Another option would be to sell the home and split the proceeds. Establish individual credit. If all of your credit has been in the form of joint accounts establish an individual account to begin building good credit in your name.
If necessary, seek out a professional mediator. These professionals will help secure an equitable settlement and protect the rights of each party. If at all possible, avoid bankruptcy. During this stressful time it is easy to think of bankruptcy as a quick and easy way to solve all of your financial problems. Be aware that a bankruptcy can stay on your credit report for up to 10 years.
If you have been ordered to pay child support, be sure to do so. Not only is it the right thing for your children but it can also get you in trouble with the law if you don't. If you are supposed to be receiving child support then make sure that you are. If necessary you can contact an attorney, social services or private agencies to help you collect. In some cases this money can make the difference between whether or not an individual is able to meet expenses without going into debt.