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Keep Divorce from Ruining Your Credit

Keep Divorce from Ruining Your Credit

In many divorces, there is a substantial amount of debt associated with the marriage. These debts are included in the division of marital property. Regardless of what you are awarded in the final divorce decree, your creditors are not interested. According to their records, if you have a joint account with your ex, you are both responsible for paying it back. You and your ex are legally bound to the terms presented in your divorce decree, but your creditors are not. They simply want to be paid and the judge’s order will not override what you already owe creditors.

Sadly, it is quite common for one or both spouses bound by court order to pay certain debts to completely ignore the agreement. If you find yourself in this situation, take action so that you can keep your divorce from ruining your credit.

  1. Close all joint accounts and credit accounts as soon as possible. It’s best to do so before you separate.
  2. Move from joint accounts to individual accounts. Serious consideration should be given to changing all accounts: gas cards, retail cards, credit cards, etc. into individually held accounts. Doing so early on in the divorce process will help you as you won’t have to re-establish credit in your own name post-divorce. You will already have done so.
  3. Discuss settlement with creditors by offering to close the accounts on which you carry balances and provide a lump sum payment that is less than the total amount owed, but substantial. In exchange for doing so, you may be able to get their agreement to get a letter from the creditor that the account is paid in full and a promise in writing that they will not report negatively regarding the account on your credit report.
  4. Freeze accounts if necessary. If you are not able to pay off an account and you are not able to come to a settlement agreement with the creditor, freezing the account would be your best option. This will protect you from additional use on the account, which is useful in the long run. Once the divorce is final, the balance owed on a frozen account can be transferred to the party being held responsible for payment by the divorce court. This can help you avoid trouble in the future if non-payment occurs.
  5. Get in touch with your creditors to let them know that you are starting the divorce process. Change your address if you have moved so that you will receive your bills in a timely manner and avoid additional issues.
  6. Make sure that bills are being paid. The process of divorce can take a while – months in some cases and just one late payment can damage your credit. Don’t let payments fall through the cracks while you are waiting to see who will be held responsible in the end. If you do, your credit will already be damaged by the time you receive your divorce decree.
If you need further assistance with your divorce or any other family law matter, contact the divorce lawyers at Arizona Family Law Attorneys.
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