Divorce may be an emotionally taxing time for a couple, but it should never result in financial ruin. Although many people focus on handling the division of shared assets like houses and cars, some couples overlook the debt and financial aspects of divorce.
Failing to properly handle your debt during and after your divorce can result in financial problems that can arise years after your divorce has been finalized. Follow these tips to help ensure that your debt is properly managed for a smoother life after divorce.
Always Check Your Credit Score
Managing your credit score has never been easier. Using tools like Experian and Credit Karma can help you understand what accounts you have, as well as show you a history of said accounts.
These services will monitor your credit and let you know when a new account has opened or closed. Your ex-spouse may not be out to financially ruin you, but even a small oversight could have an impact on your credit that prevents you from purchasing a new car or home.
Close Joint Credit Accounts
During a divorce, joint credit accounts like credit cards or other forms of debt can be a huge source of conflict. You will always want to financially protect yourself from your soon-to-be-ex going on an unwarranted shopping spree out of spite.
Protect yourself by closing paid off accounts and freezing accounts that are open during your divorce. If credit use is a large concern in your situation, ask your divorce attorney to help you file for a temporary restraining order that will prevent any further spending of joint credit.
One word of caution, however, once divorce proceedings have been filed it is possible that there are orders in effect preventing the closing of accounts in some situations, so one is advised to consult an attorney if there is any question as to this issue.
Draft a Credit Protective Divorce Decree
If protecting your credit after divorce is of high priority to you, it is imperative that your Divorce Decree be drafted with all protections available. Once a Decree is entered and signed by the Court, it is difficult or often possible to go back and make changes to the debt structure after the fact.
There are many different strategies your attorney may consider to protect your credit. Some of these strategies include assignment of debt to a party based on their liability classification, or often making sure debt you will be exposed to is paid off from proceeds of liquidation prior to distribution.
Also, it can be required that a former spouse refinance debt solely into his or her own name as a condition to keep certain assets, and in addition, there can be stated consequences to the prior spouse for failure to pay or refinance debt. An attorney will often advise against structuring a Decree to let your former spouse take extra assets based on the rationale they will take on extra debt since this could result in the former spouse defaulting on the debt while keeping your assets.
Double-Check on Post-Divorce Changes
Once your divorce is finalized, make sure to follow up on changes that were negotiated that could affect your credit score. It is always a good idea to do a post-divorce followup to ensure your former spouse has met all of the Cort Ordered debt-related obligations
Always double-check that paid and joint accounts alike are closed. The last thing you need is a surprise that sneaks up on you later in life when applying for a new line of credit.
Marx, Altman & Johnson is the Value Firm That Helps You Finalize Your Divorce
A divorce can be an excellent option for an unhappy couple to start life anew. Whether your divorce is contested or not, don’t let the process become more costly than it already has to be. The attorneys at Marx, Altman & Johnson strive to manage our practice to accommodate the needs of our clients. If you need help with the divorce process, we are ready to give our advice. Contact us today for an initial free consultation with a Dallas-Fort Worth divorce attorney.