How Do You Avoid Damaging Your Credit?
The decision to get divorced can place intense strain on the emotional and financial health of your family. Divorce can potentially damage your credit. Property can be divided pursuant to a divorce agreement, but joint debts may remain. Sometimes, an ex-spouse takes out credit on the other’s name.
Your creditors are not obligated to abide by the apportionment of debt in your divorce agreement. Divorce does not negate any pre-divorce, joint agreements you may have with your creditors. Unless there are reasons such as fraud, these pre-divorce agreements remain binding contracts between you, your spouse and your creditors. If, despite a divorce court order, your spouse is not satisfying certain debts, you must take action to protect your credit.
If you want to preserve your credit in the event of divorce, you should:
- Make a realistic budget. Living within your means under your new circumstances is crucial.
- Inform your creditors about your divorce. This will not absolve you from your obligations but you can limit the potential for credit abuse. Provide your creditors with new contact information for you and your ex-spouse. In order to prevent your ex from obtaining new credit in your name, ask the credit reporting agencies to remove you from authorized credit option lists.
- List every account. Obtain a copy of your credit report and create a list of all your accounts — joint and individual — so you can continue to monitor them. You can obtain a free copy of your credit report from all three major credit agencies every year.
- Follow up. Obtain online and paper access to all joint bank accounts and credit statements. Periodically check your credit reports.
- Separate all your joint accounts. Remove your ex as an authorized user of your individual accounts. Then proceed to the joint accounts. If you cannot agree on whose name stays on the account, freezing them can prevent your ex from accumulating charges. Note that if you close and open credit card accounts, this may lower your credit rating.
- Get rid of big assets. Just because your spouse has gotten the house and the car, this does not mean that your name will be taken off the mortgage and car loan. It may be advantageous to sell if you can realize enough cash to cover amounts due on the loan. If your spouse objects to selling the secured asset, suggest that he or she refinance the loan solely in their name.
- Get help from the court. If your spouse is not cooperating with the divisions of assets set forth by the court, inform the court — before the final decree of divorce.
It is beneficial to obtain comprehensive financial and legal advice before filing for divorce in Florida. Contact a seasoned Florida divorce lawyer for a consultation.