Family Law

Divorce and Credit

In addition to dividing assets, divorcing couples often have a fair amount of joint debt to divide, such as credit cards, automobile loans and mortgages.  You will want to protect your credit both during and after your divorce.

During the divorce
Obtain a credit report to identify all debts in your name.  The three major credit reporting bureaus are:

Experian
1-888-397-3742
www.experian.com

Equifax
1-800-685-1111
www.equifax.com

TransUnion
1-800-888-4213
www.transunion.com

Once you identify all the debts for which you are individually or jointly responsible, you may want to remove your name from the accounts (if possible), close the accounts, freeze the accounts, or transfer the accounts.  However, be aware that once a petition for dissolution has been filed, certain obligations cannot be altered without written consent of your spouse or a court order.

Continue to pay all bills for which you are individually or jointly responsible during the divorce.  If your spouse refuses to pay any bills that have your name on them, too, you may want to go ahead and pay those bills to protect your credit, and seek reimbursement from your spouse later (if possible).

If credit cards have a balance, typically the credit card company will not let you close the account.  However, you can freeze the account to avoid any further charges.

After the divorce

As part of the divorce settlement, each spouse may agree or be ordered by the court to take sole responsibility for certain debts.  If your ex-spouse has sole responsibility for debts that have your name on them, too, you should take whatever steps are necessary to remove your name from the debts.

If the debt is a secured debt, such as an automobile loan or a mortgage, the only way to remove your name is for your ex-spouse to refinance the loan.  Do not allow your name to be removed from the asset title before your name has been removed from the loan.  Otherwise, you are still responsible for the debt, but no longer own the asset.

If your ex-spouse cannot refinance the loan, the asset may need to be sold, the debt paid off and the proceeds divided.  Or you may consider keeping your name on the loan (and title) with a contractual agreement on repayment, indemnification, and future refinance or sale.  In such a case, you will want to receive notification that the ex-spouse is paying the debt in a timely manner.

If your ex-spouse is given sole responsibility for certain joint debts as part of the divorce settlement, but does not pay those debts, you may be responsible if your name is still on the debt. Periodically check your credit report for any late payments so you can immediately address any problems.  Your remedy if the ex-spouse is disobeying a court order is to file a motion for contempt with the court.