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Divorce and Debt

Divorce DecreeYou’ve probably seen video of a surfer shooting through a pipeline in a wave. It’s a precarious position, riding something that is out of human control. The object is to make it out on the other side of the wave, standing and smiling.

In many ways this surfer scenario is an apt metaphor for divorce and debt: You just want to keep your balance until you can make it to the other side.

There’s no question that this can be a painful – and painfully personal – process. Spouses on both sides can dig in when it comes to dividing up debts and assets, and so can divorce attorneys.

The way to make it through, experts say, is analyze your personal financial situation carefully and then create a smart plan that you can follow.

Divorce causes physical, psychological and financial duress, but a few guidelines should relieve some of your anxiety. However, until you are granted a legal separation, you are married — even if you live apart — and you will have obligation for your spouse’s debt.

Steps to Guard Your Credit during a Divorce

Shove aside your apprehension for the moment, get online and order a credit report. Hidden debt can be overlooked in a divorce proceeding. With credit being offered online, a few simple keystrokes and a spouse can open an account in your name without your knowledge.

Reconcile your accounts with the report, but do not share this information with anyone but your lawyer. If you find some irregularities, do not confront your future ex-spouse about them.

You should separate any revolving debt accounts, making certain that only your name is on the accounts you take. If your spouse is not open to this, leave it in the hands of the court, but do not accept any accounts in your divorce settlement that have shared ownership or that belong to your spouse.

If you accept shared accounts or those in your spouse’s name only, you will be responsible for any charges incurred on those accounts even after the divorce decree.

Likewise, any joint account — investments, such as stock and bond funds, or savings and checking accounts — should have the assets divided according to your settlement agreement. If only life were that simple. If you fear these funds might be appropriated by your spouse before a settlement can be reached, close the account and create a new one with your name only.

Consider opening a new credit card account for yourself. If your spouse has the three-digit security code on the back of any of your cards, he/she can go online and wreak havoc. You may not be able to close these accounts, but you can contact the creditor and request no further charges. Unfortunately, you won’t be able to charge on them either, so if your credit allows it, a new card is the best solution.

If you have an adult you trust, or if you are a custodial parent and feel comfortable assigning a mature child, you can add those individuals to you accounts as authorized users. Err on the side of caution.

If you are drowning in past-due statements from your creditors, don’t wait for them to hunt you down. Call them.

With the majority of today’s divorce petitions citing financial discord, creditors have learned to work harder and kinder in dealing with delinquent accounts. If you simply can’t cope with the process, you might consider the services of a qualified professional.

Traversing the financial abyss of divorce is uncomfortable, but it also has an end. The better you are able to separate your finances from those of your spouse, the easier the process will be.

Bill Fay

Bill Fay is a journalism veteran with a nearly four-decade career in reporting and writing for daily newspapers, magazines and public officials. His focus at Debt.org is on frugal living, veterans' finances, retirement and tax advice. Bill can be reached at bfay@debt.org.

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