Matrimonial and Family Law Blog

Thursday, May 16, 2019

How to Manage Your Credit During a Divorce

As you prepare for divorce and go through the divorce process, there are many things that you and your New York family law lawyer will address. An often overlooked matter that can be vital to your future financial stability is your personal credit.

While your credit score may be one of the last things on your mind during a divorce, your credit score could have a significant impact on your ability to obtain housing, transportation, utilities, education, loans, lines of credit, and insurance after your divorce is complete. A poor credit score could make the transition to single life much more difficult for you.

Obtain Copies of Your Credit Reports Now

One of the first steps to take to protect your credit during a divorce is to obtain copies of your credit reports and review them for mistakes and issues. You are entitled to free copies of your credit reports from each of the three major credit reporting agencies each you. If you discover errors on the reports, notify the creditor and the creditor reporting agency in writing to demand a correction.

Make notes of accounts that are in your name only or jointly held with your spouse. This information will help your attorney during the debt division portion of your settlement negotiations.

If you have negative information on your credit report, you may want to work to correct the matter or at least file an explanation letter for the agency to attach to the report explaining why you have a foreclosure or a repossession on your credit report (i.e. ex-spouse was court-ordered to pay the debt).

Handling Joint Debt Accounts

Joint debt accounts can be extremely difficult to deal with during a divorce action. Typically, but not always, the spouse who is granted a piece of property is responsible for the payment of the debt on the property. For example, if you owe a joint debt on your spouse’s vehicle, the court will likely order your spouse to continue payments on the loan.

Unfortunately, if your spouse defaults on the loan payments, the lender will turn to you for the payments as the joint account holder or co-signor. If the payments are not made, your credit will suffer, and you could face a repossession action or debt collection lawsuit on our credit report.

A provision that you should demand in your divorce decree includes ordering your spouse to remove your name from any joint debts that your spouse is responsible for paying after the divorce. Your spouse may need to acquire a new loan or refinance the existing loan to remove your name. Therefore, monitor the matter closely after the divorce to ensure this step is accomplished. Your credit could be significantly harmed by allowing your name to be associated with debts that are the sole responsibility of your ex-spouse.

Free Your Accounts If Necessary

If you do not have a credit card in your name only, you may want to apply for a credit card in your name as soon as possible. Once you have established a line of credit in your name and you have taken care of any issues related to your credit report, you may want to freeze your accounts during the divorce proceeding except for an individual bank account and one credit card.

This step could be important if you suspect that your spouse may attempt to drain your financial accounts or use your information to open accounts that he can use without your knowledge. Your Garden City, NY family law attorney can help you formulate a plan that protects your credit and your credit rating throughout the divorce proceeding.

Contact a New York Family Law Lawyer for More Information

A family law attorney provides guidance and support in all areas related to a divorce proceeding. Some areas, such as a client’s credit report, may not appear as important as other divorce matters. Our New York family law lawyers understand that the often-overlooked matters like protecting your credit during a divorce can have a significant impact on your ability to provide for yourself and your family after the divorce is complete. Contact us today to learn more.

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