Tips to Protect Your Credit During and After Divorce
Experienced Divorce Attorneys for DuPage County Business Owners
Divorce is a life-changing process. For some, divorce feels liberating. For others, going through a divorce causes significant stress and anxiety.
Divorce doesn't just affect your emotional well-being. It can affect your financial health as well. Wheaton divorce attorneys see far too many people who have been financially hurt in divorce, either by their former spouses' financial misdeeds, or by not fully recognizing what life will be like when the same income that supported one household must now support two households.
If you are going through a divorce, you need to take steps to protect your credit and your finances. Start with these tips:
Create a realistic budget: Your household income will be cut after a divorce. This means you need to prioritize your spending. Focus first on the essentials -housing, food and transportation; then see what else you can afford. In the divorce agreement, be realistic about what financial obligations you can take on. This is the time to reassess your family's needs and determine ways to effectively manage your financial future. It's far better to let things go than to go broke.
Assess your obligations: You and your spouse may have one or many joint credit cards that you used regularly. You probably also have credit accounts you totally forgot about, like store credit cards you stopped using years ago. Get a copy of your credit report so you can see every credit account you and your spouse have, and work to close all your joint accounts by the end of the divorce. You should also determine who are "authorized users" on your credit cards. Even if your account is not a joint account, if your spouse is an authorized user on your card, they can continue to incur charges on your credit card. After your divorce is finalized, you should ensure that all joint accounts are closed, that your spouse is no longer an authorized user on your credit cards, and consider obtaining new credit card numbers on your accounts.
Maintaining joint accounts after the divorce allows your credit score to be damaged by your ex's behavior, even if you are a responsible spender. It's better to not take the risk.
Determine how to pay joint debts: If possible, it is usually best to get rid of all joint financial obligations during the divorce process . If you have a joint mortgage, consider refinancing it in the name of the person who will keep the house. If it is not possible to refinance the home, you should discuss with your attorney options for protecting your interests, while only one spouse is staying in the home. If neither of you are staying in the home, consider selling it and dividing the profits.
Similarly, pay off credit cards if you are able. This will allow you to have a fresh start after the divorce that is debt free. However, if there are not sufficient assets to pay off all existing debts, you need to address how your debts will be paid after the divorce is finalized. It may be possible to transfer each person's portion to individual credit accounts. This way you won't be harmed if your former spouse doesn't keep current on the payments.
If you have to keep joint accounts, it's important to monitor them closely, even if you're not responsible for the payments. Get regular copies of the account statements and keep a close eye on your credit report.
Divorce doesn't have to be a financial mess, as long as you stay on top of your obligations.
If you are considering a divorce, it is important to consult with an experienced attorney who can assist you assessing your current and future financial situation. The family law attorneys at Andrew Cores Family Law Group can discuss with you in detail the divorce process, your financial options incident to a divorce and help you better understand your changing financial circumstances during this stressful period of your life.