10. How does divorce affect a person’s credit?

When you obtained credit, you and your spouse signed a contract agreeing to pay your bills. A divorce decree doesn’t change that contract. When you divorce, each of you remains fully liable for your debts.

There are several ways you can prevent credit obligations from making divorce more difficult than it already is – and re-establish your own distinct credit lines after divorce occurs. You may wish to consider the following:

• Communicate with your soon-to-be-ex-spouse. Make as clean a financial cut as possible.
• Communicate with your creditors. Decide which debt belongs to whom; then ask each company and bank that extended you credit to transfer the debt to the name of the person who will be responsible. Creditors may require written authorization from the party being removed and proof that the individual owner qualifies for the account based on income and credit history.
• During divorce negotiations, keep your joint bills current, even if you ultimately will have no responsibility for the debt. If you don’t, your creditors could become more reluctant to release one party from the joint liability.
• Ask the credit grantor to remove your spouse’s name as an authorized user or close the joint account to additional charges.
• Inform all creditors, in writing, that you are not responsible for debts charged by your ex-spouse on joint accounts after the divorce and close as many of the accounts as possible. This may not prevent them from trying to collect from you, but it does show that you attempted to act responsibly.
• Upon your divorce settlement, you and your ex-spouse might consider obtaining individual consolidation loans to cover your share of the joint bills. Pay off the joint bills with your individual loans and close all joint accounts. This helps ensure you’ll be responsible only for those bills you agreed to pay. It also will help you establish or re-establish credit in your own name.