Divorce and credit is very difficult to discuss because so many emotions are involved when you are going through a separation process. During the divorce, bills can be overlooked and credit can be damaged. There are steps you need to take in regards to your finances when you are getting divorced.
- First, make sure payments are made on time until it is decided who will be responsible for what bill. More than likely, your finances are co-mingled and missed payments will affect both credit files.
- Next, if an agreement on finances has been made, you need to contact the creditors and advise of them of the change in circumstances. You might need to provide them with a copy of the agreement, stipulation of settlement or court order that states the information you are providing. Don’t just leave it at that, follow-up with the creditors about 30 days later to make sure the change was done on the account. You don’t want accounts that you are no longer responsible for to be affecting you. Some people let accounts go negative just to mess up the other party.
Divorce can be nasty, and you must take all the precautions to protect your credit, especially if you are a woman, who are unfortunately still earning way less than a man, and will probably need as much credit as possible during the divorce process, and a possible relocation is also involved. The separation of accounts might not qualify if you are in a community property state, as the credit accounts can be deemed by the court to be community property of the marriage, and the debt subsequently shared 50/50. Follow-up with an attorney to discuss this matter further.
When women are applying for credit, creditors and lenders are not allowed to ask about marital status under Federal Law, remember the Equal Opportunity Credit Act (EOCA). However, this doesn’t apply in certain states because of community property laws that govern marriages. Community property is joint ownership of any property acquired during the marriage, regardless of who signed for said property. The following states/territories have community property laws: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Puerto Rico, Texas, Washington, Wisconsin and several Native American Territories. The laws differ from state to state, but they all have the same gist of community property ownership.
I hope this gave you a better understanding on how to handle finances during a divorce process. Read our prior blog posts on other credit and financial matters.