Coping with Financial Challenges
How to Deal with Debt and Divorce
Divorce can be a long and painful process — but add financial issues to an emotionally heated experience and the fire can quickly rage. Dealing with debt and divorce calmly and carefully, however, is important.
Obtain your credit report. As soon as you know that divorce is in your future, obtain copies of your credit reports from all three major credit bureaus. The sooner you know what you are dealing with the better. To obtain your free reports from each of the bureaus, visit www.annualcreditreport.com.
Close jointly held accounts. If your spouse uses credit accounts before the divorce or legal separation, you may be held responsible for repayment. To avoid problems, close any jointly held checking, savings, and investment accounts that you may have, and open accounts in your name only.
Understand who pays for what. A divorce decree — where each of you agrees to pay specific debts — is for convenience only. If the debt is jointly held, creditors can come after either of you to collect what is owed. Both parties need to treat post-divorce debts responsibly. Missed payments will affect each of your credit reports and collection action may start for either of you.
Know your state’s community and separate property laws. If you live in a community property state, any debt you or your spouse incurred during the marriage, regardless of who charged it, is a marital debt — meaning the creditor can hold both of you liable for repayment. In a separate property state, this may not be the case. Contact your State Bar Association to learn more about legal responsibility and debt for your area.
As a benefit of your RCU membership you have access to personal financial counseling at no charge through BALANCE. A counselor can review your credit report, work with you on a money management plan, and help you construct a plan of action to keep your money and credit in good standing during this stressful time. Call BALANCE at 1 (888) 456-2227 or visit www.balancepro.net for more information.
