Protect credit during the divorce

| May 18, 2020 | Divorce |

Ohio residents who have built a sound credit history value and need it when they are starting over again after a divorce. However, almost 40% of respondents to a survey reported that their credit rating fell by over 50 points as a result of their divorce. While divorce itself is not to blame, there are things that people in the process of a divorce can do to protect themselves.

The first thing to do is to take an inventory of all of the joint accounts that the two spouses share. These are the ones that have the highest risk for events occurring that can destroy credit. On occasion, spouses have run up debt in joint accounts during the divorce process. Unfortunately, both spouses are responsible for activity in a joint account. Thus, joint accounts should be closed during this time. Separating accounts is key to reducing risks to credit.

It is best to have a conversation with creditors during this time to alert them as to what is occurring. Creditors may negotiate the terms of payment in a way that will help credit ratings. Finally, one should consider placing a freeze on their credit. This would keep anyone from being able to open an account in their name. While this is a drastic option, it is the most effective way to protect oneself while the divorce unfolds.

Given the fact that debt and credit are key determinants of the ability to start against after a divorce, one should consult an attorney for advice as to how to reflect this in the divorce agreement. Spouses need to be careful during the divorce process that they do not end up responsible for a disproportionate share of the debt that was incurred during the course of the marriage. Otherwise, their credit score may be hurt.