Practically everyone has financial accounts, from savings and checking accounts to credit cards. Married couples often have more of these accounts than single people, and when the marriage fails and divorce is imminent, these financial accounts can create problems for both spouses.
It's very likely your personal financial condition will take a hit after the divorce. With careful planning before the divorce process begins, you will be able to lessen the financial impact of divorce.
Why the Concern?
Even if your spouse is ordered to pay off any joint credit cards or accounts, the creditors can still come after you. Your credit rating will suffer if that happens. Also, it's important to have a handle on your post-divorce finances and budget. It's up to you to protect yourself.
What You Need To Do - Now
Once the decision on the divorce has been made or when it looks like there's no way to avoid it, it's time for you to take action.
1. Inventory All of Your Accounts
Make a list of all bank, credit and loan accounts. Look through files, drawers and cabinets. Examine past bank and billing statements and canceled checks. Old accounts that you thought were canceled may still be open.
Get your credit report! This may be the easiest way to identify all accounts with your name on them. A note of caution: The credit report may not identify accounts that are in your spouse's name. From the credit report and all of your research, you should make a list of the following:
- All accounts in your name, your spouse's name and both of your names
- Accounts numbers and current balances for each account
- Bank and creditor addresses and phone numbers
For individual or separate accounts, note whether you or your spouse is an authorized user
Find Something Strange?
You might discover that your spouse has hidden bank accounts. Collect or make copies of any documents relating to those accounts such as statements, deposit slips and canceled checks. Make sure you turn the copies over to your attorney and get advice on how to proceed. There's a very good chance you'll be given a share of the accounts in the property division.
2. Make a Plan for Dealing with All the Accounts
Simply put, you should follow these steps, in order:
- Open individual accounts
- Remove your spouse's name as an authorized user of any individual account
- Close all joint accounts
- Keep close tabs on account activity
Now's the time to open your own bank account. Make sure it has enough funds to cover your expenses during the divorce process. Have your pay check deposited directly into your individual account.
Credit Card. It's also time to get your own credit card. It's much easier for you to open an individual credit card account before a divorce because the creditor will consider the income from both spouses. This is especially important if you don't earn an income outside the home, have a low-paying job or have a sparse credit history.
Stop a Potential Disaster. As soon as possible, remove your spouse's name from any individual credit account where you've made your spouse an authorized user, meaning your spouse can use the account to buy things. Your spouse may run up the debt before the divorce is final.
Close or Freeze. As soon as your individual accounts are established, you need to close or freeze all of your joint accounts. You can still be financially responsible for the debt even if a judge orders your spouse to pay the balance due. To limit the potential damage, you need to prevent your spouse from running up account balances.
3. Stay Vigilant!
As the divorce proceeds, keep close tabs on each account. Make sure you get copies of account statements, and track your credit reports. Tell your bank, credit card companies and your attorney immediately if you see any odd or unauthorized activities in your accounts.
Divorce can be emotionally and financially demanding. By taking proactive measures and staying vigilant now, you can ease some of the stress and put yourself in a better financial position after your divorce.
Questions for Your Attorney
- I didn't work during my marriage, so can I open my own accounts now?
- Will my divorced status and opening and closing accounts affect my credit rating?
- My soon-to-be ex accepted a credit card offer that was in my name only and then ran up the debt, all without me knowing about it. Am I liable for the debt?