Anyone can be stressed out in the midst of a looming divorce, with partners who cherished their memories before, doing hurtful and terrible things to one another. Children are often involved and parents and relatives take sides to make things worse. In this situation, your credit rating may be the last thing on your mind, but you may find yourself in hot water later on, with a serious damage done on your finances and your credit rating.
Central Oklahoma Consumer Credit Counseling Service’s vice president Jennifer Wallis warns that people’s reactions can be unpredictable during emotional periods. Some spouses promise to pay all the credit card accounts and loans but never do, thus ruining the other spouse’s credit. This can be a pure sabotage (Bankrate)
So, what can you do to protect your credit rating during divorce? The first step is to obtain a credit report and identify accounts in it that are joint, individual, and authorized user ones. You will want to change all accounts to individual. If your ex-to-be is an authorized user, they can charge to your account without being responsible for repayment. This way, authorized users can affect your credit score. To de-list your spouse as an authorized user, call the credit card issuer and ask that the name of your spouse be removed. The same applies if you are an authorized user of the accounts of your spouse. Ask the credit card company to have your name removed.
Another thing to do is settle with creditors. Offer to pay a smaller amount than you presently owe and close accounts. If this can be done, request a letter from the creditors that accounts have been fully paid, along with a written promise they won’t file a derogatory report with the credit bureaus.
The next step will be to move from dual to single-income budget. A key consideration here involves your housing costs, including maintenance, insurance, property taxes, and mortgage payments, if you have such. Phone and utility bills should also be taken care of. If you have racked up too much debt, be it personal loans, auto payments, or credit cards, think of what you can cut. This can be just about anything – from the summer holiday you’ve planned to your premium cell plan.
Regarding your mortgage loan, it is more complicated if the mortgage is in both spouse’s names, which is usually the case. You can either agree to sell the house and take your share of the profit or keep it. Whatever you agree on, the details should be included in your divorce agreement. Immediate court action should follow as to change the mortgage and deed information.
Finally, if you have an excellent credit to lose and have been the main moneymaker, you may consider hiring a reputable divorce lawyer. This is important if you expect complicated divorce proceedings. The attorney will ensure all paperwork is gathered and completed in time for the settlement signing.
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