Protect your Credit

A divorce decree does not take away the joint financial responsibilities of either party. If you do not be careful, your joint accounts or debts can come back to haunt you for many years. If you had joint debts before your divorce, and you do not pay and close them, you are looking for trouble. Be aware that problems may still arise even if your divorce was amicable.

Here are the most important types of joint accounts which need to be dealt with:

Mortgage
Make this your first priority. Never walk away from a divorce with a mortgage still in both spouses names. Sell the house or have it re-financed in one of your names. If this is not possible, then in the least you need to get some assurances that the payments are and will be made and that the account does not go into arrears. Inform the lender that you need to be advised immediately if a payment is not made.

Car Loans
After you take care of your mortgage, sell the car. Even if you have to sell it at a loss. It is better that you lose a little money than risk putting your credit in jeopardy. If you or your spouse wishes to keep the car then have it re-financed under one name. Again if this not possible or if it would cause hardship, then inform the lender that you need to be advised immediately if a payment is not made.

Credit Cards
Don't assume that a credit card account is closed just because you have both cut up your cards. It is very easy to re-open an account especially if payments were always on time. Notify the credit company in writing that you are closing your account and pay off the balance owed. If there is an outstanding balance the account may not actually be closed. If you can, sell off a joint asset to pay off the debt. If you have to carry the debt for a while, try to split and transfer the balance to both your personal credit cards. If your spouse is unable to get credit, then ask if a family member could co-sign for him or her.

For these and any other types of debts, the golden rule to follow is that after a divorce any joint debt or account should be closed and paid in full.