We don’t need a professional psychologist to confirm the chaotic reign of emotions during divorce.
As reported by Jennifer Wallis, the vice president of Consumer Credit Counseling Service of Central Oklahoma, credit becomes a tool in the war against peaceful separation.
One of her clients‘ ex-husband has destroyed her credit during the finalization of their divorce buy failing to uphold his agreement to pay the credit card companies.
He couldn’t pick a better time too, considering she now needs to establish her own financial identity. Yet, due to his sabotage, bad credit will burden the process of obtaining the confidence of mortgage companies, auto loans, and insurance companies.
To ensure your post-divorce credit status, Bankrate lists five ways.
Create a Budget
Ann Estes, president of the Atlantic and Heartland regions for ClearPoint Credit Counseling Solutions, says “You’re moving from a dual-income household to a single-income budget.” The only way to recover from the change is to make difficult financial decisions.
On top of the new budget should be the calculation of an affordable new house with taxes, insurance, and utility bills accounted for.
Know Your Debt and Credit Lines
Pull up a credit report to see the accounts you and your spouse opened, nothing which are individual, joint, or authorized.
An individual account means sole responsibility for the debt. A joint account means your spouse shares responsibility in the payment. An authorized account means the account is under one individual’s name who allows the other to use card without responsibility for the balance.
Remove Authorized Users
There’s nothing worse than being required to pay off your ex-spouse’s shopping spree bill at the Home Depot. To avoid this fate, review your credit report for the authorized user accounts, and then call the credit card issuer to ask for the name to be removed.
It’s also important to remove yourself as an authorized user because it can factor into your credit score.
Separate Joint Accounts
“Many people don’t understand that a divorce decree doesn’t change the contract you have with your lender,” says Rod Griffin, director of public education at Experian. “The only way to remove yourself (from a joint account) is going through the lender.”
He recommends paying off the accounts and closing them before the divorce but an alternative is to transfer them into individual ones.
To do so, transfer the balance of one credit card to another that is in a sole person’s name and close the joint account. Alternately, you can also refinance a mortgage under one name.
If splitting the accounts becomes too difficult, divide the responsibilities of the joint debt according to what works best for your situation. For instance, the person who lives in the house pays the mortgage and the person who gets the car pays the auto loan.
Keep Watch Over Joint Accounts
Ask your lender to send you a copy of the account’s statement each money, even if your spouse has been responsible.
You could also pull a free credit report from a different agency every four months to confirm all accounts are being paid on time. Through AnnualCreditReport.com, federal law allows you to request a free one every 12 months.
If your spouse isn’t making the payments, find a divorce attorney. The court will likely force your spouse to pay the legal fees and reimburse any pocket expenses if the creditor tails you.
For more information, check out: Fox Business