Avoiding credit mistakes in a divorce

Couples in Wisconsin who are divorcing may want to know how they can make sure their credit is protected. There are several steps that can be taken prior to and during divorce that will help.

It is important for those who are considering divorce to have a good understanding of their finances and their obligations. This includes knowing which accounts are joint and what kinds of debts they may share. Opening an individual account for depositing paychecks is a good idea if a divorce is likely. Many people may not realize that regardless of what a divorce decree says, they are responsible for any accounts that their name is on. That means that if the other spouse agrees to take on a debt but the debt remains in the name of both individuals, there may be an impact on both of their credit reports if the debt is unpaid. Collections agencies may also pursue either or both parties for jointly-held debts.

In addition to opening up a bank account, those who are contemplating a divorce should also consider obtaining their own credit cards. This will allow them to begin establishing credit in their own name. They should also make sure their information is kept confidential. This may include changing PINs and passwords.

Even if spouses go into a divorce with good intentions, there may be conflicts over money and debt. Protecting assets in these ways can help secure the financial situation for each spouse before moving ahead with negotiations. A lawyer may be able to help individuals understand their financial picture and how issues like property division might be resolved. Divorcing couples should also keep in mind that ensuring that the credit of both spouses remains healthy is in everyone’s best interests going forward.

Source: NerdWallet, “4 Ways to Protect Your Credit During and After a Divorce”, Anisha Sekar, Feb. 13, 2015