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Laura Dale & Associates, P.C.

Protecting your credit during a divorce

As you prepare for divorce, you may be focusing your energy on the custody of your children and the division of your assets. Following your attorney's advice, you are considering the most efficient ways to provide well for your children and protect yourself financially in the future. What you may not realize is that your debts also play an important role in your divorce.

Along with asset division comes the division of debt. Unless you and your spouse signed a prenuptial agreement that maintained your debt separate from your spouse's, you are probably facing the possibility of walking away from the marriage with some financial baggage. However, there are steps you can take to minimize the impact.

Taking control of the situation

The first priority is to gain a clear understanding of the debt that exists between you and your spouse. Even if your spouse accumulated debt on accounts of his or her own, there is every likelihood that a divorce court will consider those debts part of the marital liability if your spouse opened them while you were married. Financial advisors encourage divorcing spouses to obtain recent credit reports from Experian, Equifax and TransUnion and then monitor those reports regularly throughout the divorce proceedings.

To begin the separation of your financial life from your spouse's, it is wise to close any joint accounts, or at least attempt to remove your name from the accounts, including:

  • Checking accounts
  • Credit cards
  • Mortgages
  • Auto loans
  • Personal loans

This way, you can begin to build a separate financial identity and also protect yourself if your future-ex spouse decides to spend freely with a credit card or stops making payments on loans.

Staying proactive for the best results

Separating your mortgage may be difficult. If one spouse is able to buy out the other's interest, this may help make the separation easier. Another option is to refinance the loan and remove one spouse's name. If neither of you can afford these options, you may have no choice but to sell the home to avoid the scenario where your spouse fails to keep the agreement to pay his or her share and you must cover it or face foreclosure.

Proactive steps to protect your credit may allow you to move on from your divorce with your credit rating intact. It may also facilitate the Texas divorce court's division of your assets and liabilities if you and your spouse have already reached agreements about these issues.

Divorce is hard, and asset division can be complicated. But help is available.

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