Building a good credit score can take years. When going through a divorce, you want to ensure that all your hard work and diligence don’t go down the drain. Whether or not your ex-spouse acts in bad faith, their actions can significantly affect your credit. Luckily, you can protect yourself from credit abuse post-divorce.
A divorce offers a fresh start. However, many divorcing couples experience financial challenges in the early stages of their new lives. You’re not just determining child support, alimony and dividing marital assets. You’re also distributing marital debt.
Can’t pay off joint debt before the divorce gets finalized? Here are three ways you can prevent your ex-spouse from harming your credit.
Divide credit debt and close joint accounts
A creditor can’t close or change the status of a joint account unless one of the account owners requests it. Ensuring that your ex is paying their debt doesn’t have to be your responsibility. You can divide the debt and close your joint account.
Your bank may provide you with the following options:
- Get the outstanding balances transferred to new individual accounts
- Submit separate credit applications
- Refinance loans to remove the obligation of an ex-spouse
Some divorced couples opt to keep a joint account for reasons such as a shared business. You can discuss the pros and cons with your lawyer or financial advisor.
Get your credit score from a reputable credit institution
Minnesota is an equitable division state, meaning spouses share all marital assets and debts “equitably.” You’re typically not liable for your ex-spouse’s personal debt accrued before the marriage or credit card and loan balances held only in their name. However, some spouses are good at hiding their financial liabilities.
To achieve peace of mind, you can get the following information in a free yearly credit report:
- Debts held under your name
- All payments and accounts reported
- Whether your ex is behind on payments for joint accounts
Fill out and submit an annual credit report request, a free service from the three credit reporting agencies, as mandated by law.
Include an indemnity clause in your divorce agreement
If your ex-spouse refuses to pay their debt, an indemnity clause in your divorce agreement can be your best ally. It explains which spouse owes the debt and holds them accountable. It allows you to take your ex to court for claims such as reimbursements.
Being saddled with your ex-spouse’s debts is not just a scary situation; it’s a form of abuse. Maintaining good credit starts with being upfront with your creditors. Don’t let fear or shame stop you from asking your creditor and lawyer for advice.
