Just as you'll split the assets with your spouse when you divorce, you'll both be given a portion of the marital debts to pay. Unfortunately, it's all too common for one person to stop making the required payments on joint accounts, damaging both parties' credit. To prevent your ex-spouse from hurting your financial health, follow these two tips.
Remove Opportunities to Run Up Debt
As soon as you and your spouse decide to separate, it's important to close off as many opportunities to add debt onto shared accounts as soon as possible. For instance, if your spouse is an authorized user on your credit card, contact the bank and have them removed. This will stop them from going on any spontaneous spending sprees and leaving you footing the bill.
Pull your credit report and check each account to determine if your soon-to-be ex has access to it and take appropriate action. Depending on how long you were together, there could be old accounts you've forgotten that are still accessible to them. Doing this will also ensure you don't miss any bills that should be part of the divorce estate.
Another thing you'll want to do is freeze your credit so no new accounts can be created in your name. Many spiteful spouses have killed their ex's credit by using their identity to get loans and credit cards and letting them go into default. Avoid this by locking down your credit and securing identity documents where your ex can't get them.
Assume More Debt in Exchange for More Assets
This may seem counterproductive, but one strategy for protecting your credit is to take on most or all of the marital debt. By assuming the debt, you can make sure it gets paid, so you don't have to worry about what your ex is doing. This is particularly beneficial if you're dealing with an abusive spouse as this can eliminate any need to contact them after the divorce and keeps them from trying to abuse you via your finances.
Another reason why you might want to take all the debt is the court will usually award you more assets to balance things out. For instance, you take on $30,000 in credit card debt. The judge may grant your request for the house if there is enough equity in it you can use to help pay off the bills.
You'll want to consult an attorney before pursuing this option, though. The lawyer can advise if this is the best way to handle marital debt in your divorce and if so, negotiate with your ex and the courts to ensure you get a fair settlement.
For advice on handling the separation of debts and assets in your divorce or assistance with other issues in your case, contact a family law attorney.
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