Credit Cards and Divorce: What You Need To Know To Handle Those Cards Correctly

Divorce can be one of the most challenging times in a person’s life, not only emotionally but also financially. One of the critical aspects of managing your finances during this period is handling credit cards and the unsecured debt that comes with them. Here’s a comprehensive guide on what to do with your credit cards if you’re going through a divorce.

Understand The Legal Implications –

Before making any moves, it’s essential to understand the legal landscape of your state regarding debt. In community property states, debts incurred during the marriage are typically considered joint debts, regardless of who used the credit card. In equitable distribution states, debts may be divided more fairly but not necessarily equally. Do some research and find out what kind of state you live in when it comes to debt.

Inventory All Credit Accounts –

Start by making a list of all the credit cards held by you and your spouse, whether they are joint accounts or individual accounts. This inventory will help you and your attorney understand the full scope of your financial obligations.

Separate Your Finances –

One of the first steps is to separate your finances. You may want to close any joint credit card accounts to prevent further charges from being added. If it’s not possible to close an account immediately, at least freeze it to prevent any new charges. Opening individual credit card accounts can also help in building your credit history post-divorce.

Pay Off And Divide The Debt –

Ideally, try to pay off and close all joint credit cards before finalizing the divorce. If that’s not feasible, work with your spouse and legal advisors to agree on who will take responsibility for each debt. Make sure this agreement is documented in your divorce decree.

Monitor Your Credit Report –

During and after the divorce, keep a close eye on your credit report. This vigilance will help you catch any discrepancies or unauthorized charges quickly. You can get a free credit report from each of the three major credit bureaus annually at AnnualCreditReport.com.

Communicate With Creditors –

Inform your creditors about the divorce. If you are taking responsibility for a joint account, request that they convert it to an individual account in your name. Be aware that not all creditors will agree to this, but it’s worth asking.

Consider Legal Protections –

In some cases, it may be wise to obtain a legal order to ensure that your spouse pays their share of the debts. This step can protect you from being held responsible if they fail to make payments.

Rebuild Your Credit –

Post-divorce, focus on rebuilding your credit. Pay your bills on time, keep your credit utilization low, and avoid taking on new debt. A strong credit history will be crucial as you move forward independently.

Seek Professional Advice –

Finally, consider consulting a financial advisor and an attorney who specializes in divorce. They can provide personalized advice and strategies to protect your financial interests. They may recommend having a meditation to reach an agreement.

Conclusion –

Handling credit cards during a divorce requires careful planning and proactive steps. By understanding your legal obligations, separating your finances, and taking measures to protect your credit, you can navigate this challenging time more smoothly. Remember, while divorce marks the end of one chapter, it also provides an opportunity to start anew with a solid financial foundation. Prioritizing your financial health during this transition will set you on the path to stability and future success.

Disclaimer: The information provided is for informational purposes only. The materials are general in nature, are not offered as advice or guarantee, and should not be relied upon without guidance from an attorney or a financial advisor. Reading the information does not constitute a legal contract, consulting, or any other relationship with Advantage Credit Counseling Service.