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Protecting Credit Rating During the Divorce Process
If you are going through a divorce, take steps to protect your credit rating.
September 27, 2011 /Law and Legal PR News/ -- Protecting Credit Rating During the Divorce Process
According to the Division of Vital Statistics at the National Center for Health Statistics within the Center for Disease Control, Arizona had the eleventh highest divorce rate of all the states in the U.S. The dissolution of a marriage is a stressful time and is filled with many financial decisions as people who used to be part of a couple have to forge their own financial identities. It is particularly important in a weak economy for people to make sure their credit histories are as strong as possible to help make getting housing and credit that people need to begin new lives after divorce. By taking some simple steps, a person can assure that going through a divorce does not ruin his or her credit.
Make a Budget
One of the most important things for a person going through a divorce to do is make a budget for after the divorce. By gaining a clear picture of monthly expenses that a person will have after the divorce, a person can have a clear idea of what financial obligations are feasible to take on in the divorce settlement.
The most important thing to include in the budget is housing costs, including costs for mortgage or rent payments, security deposits for renters, taxes, insurance, and utilities. After a person determines housing costs, he or she needs to include other monthly obligations in a budget plan, such as car payments, other insurance premiums, student loan payments, food and other necessities.
Assess Credit Lines and Debts
After a person has a monthly budget for the future, he or she needs to begin to untangle the financial past with the former spouse. An excellent way to see all open credit accounts and debts is by running a credit report. The report will inform a person which accounts are singular, which accounts are held jointly with a spouse and which accounts have "authorized users" on them in addition to the account holder's name.
In community property states such as Arizona, people need to be aware that any debt acquired during the marriage is considered marital debt shared between both parties, even if only one person's name is listed on the account.
Joint Accounts
After figuring out which accounts have both spouses' names on them, either as account holders or authorized users, couples should make those accounts single accounts. Contact lenders and remove the spouse as an authorized user from accounts or transfer the balance of joint accounts to a single account and close the joint account.
It is very important to remove a former spouse as an authorized user on any accounts, as the authorized user is not responsible for payment but is allowed to run up debt on the account. Having a spouse still able to incur debt during and after the divorce process leaves a person vulnerable to the possibility that a vengeful spouse will run up debt out of spite.
Be Vigilant
People should continue to monitor, and if necessary make payments on, joint accounts until the creditors' records show that they are no longer responsible for paying so creditors do not make negative reports about the account to credit reporting agencies. It is not wise to assume that a spouse will make the payments that he or she is supposed to.
Divorce is stressful but a person can eliminate a part of the worry by ensuring his or her financial security through the process with a solid financial plan to follow. If you are considering divorce, do not hesitate to contact an attorney who can guide you through the process and help you understand your options.
Article provided by Bishop Law Office
Visit us at www.bishoplawoffice.com
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