Creditors aren’t just concerned with the division of assets and debts during a divorce. If there is debt in a jointly-held account, both spouses are equally responsible for repayment. A creditor isn’t bound by the final divorce decree and court orders don’t cancel out debts. Moreover, a divorce attorney in Walker, MN often won’t tell clients the potential dangers of failing to follow court orders. Read on for some tips on preventing divorce from ruining one’s credit.
Close Joint Accounts
Before separating and where possible, all joint credit accounts should be closed. Doing this before initiating divorce proceedings keeps a vengeful spouse from abusing the account and running up debt that the other spouse will be responsible for.
Open Individual Accounts
Spouses should consider converting all retail and credit card accounts to individual status. By doing this, the spouse does not have to re-establish their own credit after divorce. Doing so also reduces issues once the divorce procedure starts.
Settle With One’s Creditors
Spouses can offer to close accounts by paying less than what’s owed. If this process is successful, the spouse should get a letter from each creditor stating the account is paid and there will be no derogatory filing with the credit bureaus.
Freeze Credit Accounts
If one cannot settle or pay off a credit account, a freeze is the next best option. It will prevent the use of the account, but it can protect them in the end. Once a divorce is finalized, the remaining balance may be transferred to the party with responsibility. If that person does not repay the debt, it won’t affect the other spouse’s credit rating.
When going through a divorce, spouses should call their creditors and let them know what’s going on. If address changes are made, creditors should be kept updated so the person continues to receive their bills.
Continue to Pay Bills
A divorce can take many months, and just one late payment can hurt one’s credit. Even if all one can do is to pay the minimum monthly payment and they know the spouse will ultimately be responsible, it’s worth it to avoid the hit to one’s credit. Those concerned about the effects of divorce on their credit should visit Borden Steinbauer Krueger and Knudson P.A. to consult a divorce attorney in Walker, MN as soon as possible.