When a couple dissolves their marriage, they have a lot of assets to split between them. One of these assets is debt. Because Nevada is a “community property” state, it’s likely that any debts you and your spouse have — loans, credit card debt, and other bills — will be split 50-50.
Although a divorce will not impact your credit score directly, a lot of things can happen during and after a divorce that will. Your financial credit may be low on your list of priorities, but it can heavily impact your future, so try to stay on top of the following recommendations. Here is what you should do to protect your credit:
Cancel joint accounts and refinance your loans.A divorce may mean you and your spouse are no longer married, but any joint accounts are still legally binding by the institution you opened them with. This includes accounts where one person is only a cardholder. Any late payments on such accounts will appear — correctly — on both spouses’ credit reports. To prevent damage to your credit from your spouse’s actions, cancel all shared accounts, and open your own checking account and credit card. Whenever possible, refinance shared loans as individual loans, though this can take time. If it is easier, you may choose to have one person’s name removed from each account, but this is a less secure option, and may not be allowed until all debt on the account has been repaid. Always request a written record of account changes and closures, and follow up with your creditors to make sure they have updated your information correctly.
Freeze and monitor accounts that cannot be closed.If for some reason a loan can’t be refinanced or an account can’t be closed, request that it become “inactive” so that new charges cannot be made on it. Sign up for monthly statements from any joint accounts or loans that are still open or active. If you notice that your ex-spouse is about to miss a payment on a shared account, or already has, contact them to work it out, or make the payment yourself to prevent credit damage.
Update all your information.Make sure you update payment information to your new checking account so that a creditor is not trying to draw payment from a closed account. If you have a lot on your mind, switch your bills to automatic payments so that you’re less likely forget one. Update your address on all accounts to make sure you’re still receiving all of your bills. Additionally, update all of your usernames and passwords. You do not want your former spouse to have access to any of your online accounts.
Limit your spending.This may go without saying, but it is best to avoid shopping sprees when going through a divorce. Set a budget and stick to it. Also, don’t fight for a shared house unless you can truly afford to keep it. It can be difficult to part with the place you called home for so long, especially the place you raised your family, but it can also send you into a downward financial spiral unless you have the means to keep it.
Ask your attorney for help. After sharing a long credit history, it’s important that your credit be distinguished from your spouse’s. Sometimes people struggle to balance their finances after divorce, and other times a former spouse can become vindictive. If payments are late or bankruptcy is filed on an account you are still listed on, this will hurt your credit. Having evidence of a good credit history prior to the divorce may help your case. Additionally, ask your attorney to establish terms within your divorce agreement to protect you from credit damage due to new purchases or missed payments by your spouse.