Will Your Credit Score Survive A Divorce?
As though divorce itself isn’t bad enough, some people discover they have an ex who has destroyed their credit rating once the final papers are signed. It could mean they no longer qualify for loans. You can avoid that fate by taking financial matters into your own hands.
Organize Your Finances
While it’s always important to be fiscally aware, it’s especially critical when you’re going through a divorce. Knowing and understanding the minutiae of your finances will minimize unpleasant surprises down the road. Consider, therefore, making a list of your shared property, assets, and debt, and making a file containing key financial documents:
- Your tax returns for the past three years or more;
- W2 stubs;
- Mortgage statements;
- Car loans;
- Pay stubs;
- 401k, Roth, pension and similar accounts;
- Savings and checking statements;
- Stocks and additional securities;
- Credit card statements;
- Your credit report.
Assertively Guard Your Credit
Many couples have accrued some joint debt, and that debt could grow quickly if your spouse continues to have access to your joint accounts. Address the issue decisively:
- Because joint credit cards can affect your credit score, the best plan is to pay off and then close all joint accounts if you have the means. That way your ex won’t be able to build up charges for which you will be partly responsible long after the divorce has been finalized. The fact is, even if your divorce decree specifies otherwise, creditors can try to hold you accountable for missed payments.
- If paying off joint credit cards is out of reach, the next best thing is to freeze all joint accounts. That way neither partner can continue to charge on them.
- To build your individual credit and improve your credit score, get your own credit cards and start using them.
- Convert any joint checking and savings accounts to yours alone, or simply remove your name from the account and open your own.
- Inform creditors that you are getting divorced and make sure they have your current contact information for you.
Update Official Documents
Review documents related to estate planning, life insurance, health insurance, and even car insurance. You may want to consider changes to your beneficiary plans, power of attorney and so on. Your employer can help you to make changes to your health benefits, too.
Other Financial Matters
Your new income and expenses will have an impact on your credit, so don’t forget to consider the way divorce may impact your finances; support payments, taxes, home maintenance, and health insurance premiums could all be significantly different after the divorce. The money available to you to make payments toward your debt is likely going to shrink in a divorce, and it’s best to make financial decisions with your eyes wide open.
Legal Representation is Key
The experienced Baltimore divorce attorneys at The Law Office of Hasson D. Barnes always work to achieve the best possible outcomes for you. To discuss your situation, schedule a confidential consultation in our Baltimore office today.
