Credit and Divorce

Divorce is never easy but it can get even trickier when it comes to sorting out credit. You will want to pay particular attention to issues involving credit. Your debtors are not a party in your divorce, consequentially, no matter what your divorce decree states - you both will remain responsible for the debts until they are paid off or until you come to some agreement with your creditors. One of the first things you can do is take a look at the type of credit accounts that were opened during your marriage. Certain accounts cause more problems then others when it comes time to divide up the debts.
There are two main accounts:

Individual:
Your income, assets, and credit history are the only ones considered by the creditor in this type of account. It doesn't matter whether you are married or not because you alone are responsible for paying off the debt. Additionally, any account opened after June 1, 1977 that has more than one account user must be reported in the credit report of each and every user of that account. So, if your spouse is an account user of your individual account (or vice versa) any late payments will be reported on their credit report as well. However, only the individual is technically responsible for making the payments. Finally, if you live in a community property state you and your spouse will both be responsible for any debts incurred during the marriage - including those that were incurred through individual accounts.

Joint Account:
You and your spouse's income, financial assets, and credit history are considered for a joint account. No matter who winds up responsible for the debts after the divorce, a joint account can affect both of your credit histories.

When you are considering divorce or when you decide to separate its important that you make sure that regular payments are made on any joint accounts. Once you divorce, you will likely want to close any joint accounts or accounts in which your former spouse was an authorized user. Unfortunately, a creditor cannot close a joint account, by law, because of a change in marital status but they can do so at the request of either spouse. You can also ask the creditor to just convert these accounts to individual accounts. A creditor however, does not have to do this. Instead they may require you to reapply for credit on an individual basis. In the case of a mortgage or home equity loan, a lender is likely to require refinancing to remove a spouse from the obligation.

You can also send a certified letter to account holders letting them know that you and your spouse have divorced and that as of that date, you will not be held responsible for your ex-spouse's debts. Also, you will want to send a letter requesting that you be removed from any accounts that your spouse may be keeping active.

In all, the best way to protect your credit during a divorce is to obtain the services of an attorney to ensure that everything is done properly.

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