This is a topic near and dear to my heart.
Don’t let your ex trash your credit!
When my friend, Sally, got divorced last year, her ex agreed to pay off their $25,000 in credit card bills. This was part of the property division and was made part of the divorce judgment.
Ever since then, creditors have been calling and writing her because her ex is late or fails to make a payment. Last week, she was served with a lawsuit from Capital One.
Despite the divorce agreement, Sally is still on the hook. Her credit is trashed and now she has to deal with a lawsuit and possible wage garnishment. Sally told me, “I just assumed my responsibility ended once the divorce was over.”
I always tell my divorcing clients: Creditors don’t care how bills or loans are divided in divorce. If it’s a joint debt, it stays that way. The credit card agreement or mortgage note trumps the divorce.
So, what should Sally do now? If she decides to pay off the cards and restore her credit, she might be able to go after her ex for reimbursement in divorce court. If she can’t pay off the debts, she can always consider bankruptcy.
But, I consider myself a preventative law attorney, so I am going to tell you what to do BEFORE the divorce:
Track down all your credit cards. Pull your credit report to make sure you know about all your active and open accounts, even those with a zero balance. Contact all the lenders and do the following: close or freeze the account and remove authorized users from account. If you can’t close all the joint accounts because there is a balance or the lender requires both signatures, try to at least freeze the account. If both signatures are required, do what you can to get it. Follow up is crucial.
Meanwhile make sure the bills are getting paid. Divorces can take months and all it takes is one late payment to hurt your credit.
And here’s a side note: Don’t go crazy opening new accounts in your individual name. This can actually have a negative effect on your credit score. Only apply for the credit you need. And that’s some good advice, whether you’re divorcing or not.
