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Preserve and protect credit during a divorce

On Behalf of | May 18, 2020 | Divorce

Anyone going through a divorce hopes to emerge with the highest credit score possible since they may need that to find a new place to live and to generally begin again in life. However, California residents may find that things that happen during the divorce threaten their credit scores. Even though divorce itself is not automatically bad for credit, one should ensure that the effects of the divorce do not sink creditworthiness.

One of the worst things that can happen is one spouse running up debts in the other’s name. So long as there is a joint account, both spouses are liable for paying back the debt. This is why one spouse needs to take the time early on in the process to catalog all of the joint accounts that could pose a risk to their credit. They are encouraged to begin separating accounts as soon as possible. If it is possible to close accounts completely, it will reduce risk.

At the same time, if the accounts cannot be closed, one should inform creditors of the situation. They may be able to negotiate with the creditor in a way that could preserve their credit. If there is an even greater danger to one’s credit, they should consider the more drastic option of placing a freeze on their credit. This would keep someone from taking on additional credit in their name.

One should retain a divorce attorney if there is any concern that they may be saddled with their spouse’s debts. If the other spouse is running up debts in their name, they may take legal action, assisted by their attorney. The lawyer might also help negotiate the divorce agreement in a manner that apportions the debt between the two spouses and divides the marital estate to reflect the debts that each spouse must pay.