If you have to go through a divorce in Minnesota often the last thing you are thinking about is your credit score, however even during the most difficult times in our lives you’ll still need to purchase a house, a car and probably need a credit card. The unfortunate fact is, divorce can have a significant effect on your finances and your ability to get credit in the future. In the paragraphs below I will explain why you need to be keenly aware of your credit during your Minnesota divorce.
Divorce and Your Credit
You should know the cold reality first: even the most agreeable and uncontested divorce can leave you in financial ruin. During your marriage, you most likely shared all of your finances, from your checking and savings accounts to your home, credit cards and even cars and retirement accounts. The problem is that often times the credit is not equally divided, one person will take the loans out for the cars, one for the credit cards, and then the house is often in both names.
One of the biggest misconceptions that I see all the time from divorce clients is that you need to understand that when you get a divorce, it is your marriage that is ending and not your shared financial responsibilities. You can’t tell MasterCard or your mortgage company that your ex is responsible for the debt because when you each got the credit, you each promised to pay. It’s important that you understand this and there are some tactics to preserve your credit.
How To Protect Your Finances Before the Divorce
Most people don’t want to think about their finances while their going through a divorce in Minnesota and while the ostrich approach to your finances is a tactic, it’s a bad tactic. Before you even go to a Minnesota divorce lawyer you can be proactive and take some steps outlined below:
- Assess Your Debts — You need to be aware of all the accounts you are responsible for, including bank accounts, mortgage, credit cards, car loans, and utilities. Even if you and your spouse have decided who gets what property, you should make sure that the right person is responsible for their respective debt and that all debt is accounted for. A great way thing to do is get your credit report. You can get a free annual credit report at www.annualcreditreport.com . (yes this is the official free site!)
- Dissolve All Joint Accounts — Rather than trying to divide up what is owed on your joint accounts and asking your ex to pay their half before the divorce (which often times they don’t and if they don’t your credit will suffer!), you should remove the proper persons name from the accounts or as a last ditch effort cancel the accounts. If you have vehicles in both of your names, you will need to get the vehicles retitled and auto refinancing may be necessary to get the loans in just one name.
- Think About The House — Decide what you want to do with the home. If you can afford it, great keep it but be prepared to refinance the house to remove your ex’s name from the mortgage. If you can’t afford this, be sure your soon to be ex is prepared to either sell the house or tell your soon to be ex that they will have to remove their name from the mortgage.
- Document Everything — It’s always a good idea to document everything in a divorce. If you don’t need it ok, recycle it, but if you do it can come in handy to keep track of when you called a credit card company or mortgage company.
Saving Your Credit After The Divorce
Ok, you didn’t see this blog until after the divorce there are still some things that can be done to help your credit after the divorce.
- Check Your Credit Score — 6-12 months after the divorce is finished, go ahead and pull your credit again. This time make sure there is nothing “extra” in there. Double check and make sure that everything is as it should be.
- Notify Creditors of Your Divorce — Once you have separated all of your joint debts, and are no longer legally bound. Call the creditors who have been bothering you and talk to them. Call your banker and see what they can do to help with your car or auto loans.
- Protect Your Credit Score For The Future – You should consider looking into an identity protection services.
Divorce is never fun, it’s always very difficult and emotionally draining, but you need to consider the future and not ignore your credit during the divorce.
If you have any questions or comments feel free to email me at Jkohlmeyer@rokolaw.com