“I’m concerned that my credit is going to be affected as I go through my divorce, what can I do to protect myself?”
You have good reason for concern. If your spouse is given responsibility for debts and they are not paid, the debt holder will look to any person ever on the debt. So:
Order your credit report and that of your spouse. Determine which cards you wish to retain and which your spouse will. Send certified, return receipt requested, letters to each credit card company telling them that 1) effective the date of receipt of the letter, you will no longer be responsible for additional charges on the card or 2)to remove your spouse.
Make minimum payments until the divorce is final. Request copies of all credit card statements (cancelled or not) until all current charges are paid. If your spouse doesn’t make payments as required; you make them via phone check the day before the due date. Ask for reimbursement during negotiations.
Require, as part of the negotiated settlement that cards on which your social security number or your name were a part of the record be paid within 30 days of the date of divorce. If you are fearful your spouse will not be responsible for paying debts, take all the debts and an equal or greater amount of assets that are readily convertible to cash.
Be particularly aware of on time payments to mortgage companies! Being 30 days late on a credit card is bad but being 30 days late on a mortgage payment is a REAL PROBLEM when applying for a future mortgage.
Beth Dickson (CFP, CDFA) is a financial planner and mediator practicing at Equitable Solutions in Houston and the head of Texas WIFE, a non-profit agency that helps women take control of their financial future post-divorce.