Divorce and Your Credit

We’re all told to check a potential fiancés credit habits and score before entering into a serious relationship, but we often forget to think about the enormous number of credit issues that result from divorce. Should your relationship end in this manner, you may find that your credit allowances will be reduced in the future. In addition, if your spouse runs up a debt, you may find yourself liable for the debt and unable to keep up with payments on your own. Unfortunately, the majority of the credit issues you’ll have to deal with won’t be easy to resolve.

Separating your creditors

Today, most credit card companies will allow you to designate separate card holders on a single account. For the most part, this won’t help you determine who is responsible for each charge made to the account. If at all possible, make sure that all of your credit cards are kept separate from those of your spouse. While this may be tedious to arrange, you can still apply for a new card in your own name and transfer any debts onto it that might be yours in the event of a divorce.

In many cases, if you didn’t keep separate credit cards, it may be difficult – if not impossible – to decide who will be responsible for paying joint credit cards. Depending on your situation, you may want to see what you can do with other areas of the divorce settlement. For example, if you know what your monthly minimum balances will be, you may want to apply for alimony to cover what your spouse would normally contribute.

Managing credit issues amicably

Chances are, you’ve heard of divorce proceedings that take years because spouses can’t agree on settlement terms. If you find that your lawyer can’t make reasonable progress, it may be helpful to seek the advice of an accountant or debt management specialist. They may be able to teach you how to manage debts on your own or help you find a compromise that will enable you to move forward with divorce proceedings.

Getting help with resolving credit issues

Without question, if you’re going through a divorce, both you and your spouse will need an enormous amount of help from certain professionals in your community. Aside from seeing a lawyer, it may also be useful to seek the advice of a debt specialist. This person can help you reach some understandings about joint assets, as well as how to divide your debts fairly. If you find that your former spouse is unwilling to work with you, contact each individual credit card provider to learn more about your specific rights.

Many people realize that being in debt is a serious issue, but if you’re planning to get a divorce, a lack of preparation in resolving your debts can be catastrophic. You may find it more difficult to obtain credit or repair existing damage to your credit rating – or you may find yourself forced into a bankruptcy situation. Therefore, even if you firmly believe that your marriage is safe from divorce, you’ll need to give some serious thought to ensuring that your credit isn’t damaged by any future marital problems.

Protect your Credit and Yourself Against Identity Theft

Identity theft is on the rise. The consequences of identity theft are frightening. Identity thieves can use your personal information for a variety of wrongful ends. In particular, identity thieves may use your personal information to open a new credit card account in your name and use the card to rack up large debts for which you may be held responsible; fraudulently obtain identification, such as a driver’s license with your name and/or picture; establish a phone account in your name, then make expensive long-distance calls.

Be alert to the risk of identity theft. In particular, you should be conscientious regarding receipt of your bills. If you track your credit card bills and your regular monthly receipt of the statements, you will notice if you fail to receive a bill. A missing bill may mean that identity theft has taken over your account, and changed your billing address, to cover up his misdeed. You should also be curious about receiving credit cards that you didn’t apply for.

If you are denied credit for no apparent reason, receive credit on highly unfavourable terms, such as a very high interest rate, or receive a telephone call from a debt collector regarding a debt for which you have no knowledge, you should take immediate action.

  • Obtain all the information that you can collect from all persons involved. For example, speak to the bill collector and ask him for details of the debt which he claims is your own. What was the date that the debt was incurred, by what method, and for what purpose?
  • Contact your local police station regarding the filing of a police report, and to get further resources regarding the appropriate protocol for dealing with the situation.
  • Close bank accounts that can be accessed with your information, and contact all appropriate agencies which issue identification.
  • Place a fraud alert on your credit cards.

Diligence will help you avoid any responsibility for debts that you did not incur, but anticipate that clearing your credit will take time and a myriad of calls/trips to various regulatory/policing bodies.

To avoid the situation in the first instance, there are steps you can take to protect yourself against identity theft.

  • Do not carry identification that is not necessary, for example, your social insurance card.
  • Don’t give out personal information to anyone who contacts you through a telephone solicitation. In any event, don’t give out your personal information such as your social insurance number, unless it is absolutely necessary. If you do give out personal information, enquire as to its use, and with whom it will be shared.
  • When selecting a password or PIN, select a code which is random, or at least, do not use a birth date, your mother’s maiden name, or other information which is readily accessible.
  • Keep a sheet of your personal information and in particular your credit card account numbers, expiration dates, and the customer service numbers so that if your cards are lost or stolen, you can quickly advise your financial institution to put a freeze on your card. Some credit cards have a feature by which you can register all your card account numbers with them- this means that if your wallet is lost or stolen, you can make 1 phone call- the respective credit card company will then make all your other calls for you. If you register for this service, be aware as to who the credit card company will contact on your behalf, and follow up with them, to confirm that the necessary steps have been taken.
  • One of the means used by identity thieves to steal your personal information is rummaging through garbage for discarded credit card statements, bills or cheques; therefore, tear up or ideally shred all cheques, discarded statements and bills. Expired credit cards should likewise be destroyed. In particular, ensure that you destroy pre-approved credit card or credit line solicitations.
  • Minimize your problems by minimizing the number of active credit cards that you own.
  • Cancel all inactive cards.
  • Sign new credit cards upon receipt. If a credit card’s signature pad has rubbed off, order a new credit card. In the interim, record in dark ink upon the old signature pad, “Request Signature” or “Request ID” in the event that the card is stolen.
  • Request a Credit Report on a periodic basis to verify accuracy.

Does getting a divorce ruin your credit?