Dear Kim,
I’m 49 and recently divorced after 20 years of marriage. My ex always handled our credit and bills, and now I’m worried about losing access to credit or damaging my score. I still have a mortgage in my name and a teenager at home. How do I rebuild or protect my credit when I’ve never really managed it on my own?
Sincerely,
Credit Concerned Mom
Dear Credit Concerned Mom,
The first thing I recommend you do is pull a copy of your credit report. See what your credit score is and what items are listed in your name. If you have your own income, that will allow you to apply for credit in your name. I would open a card in just your name while you are still married. I would also remove your name from any joint credit cards and refinance any other joint debt. Your home will take some doing, so focus on the easy items first.
During a divorce, marital debt is generally considered a shared responsibility and is divided equitably, often starting at a 50/50 split but considering factors like who incurred the debt, who benefited from it, and who has the financial means to pay it off. Debts taken out before or after the marriage are usually considered separate, though a separate debt can become marital if marital funds are used for it.
Remember that the credit companies don’t care who is awarded debt in a divorce settlement. If your name is on the debt, they will expect you to pay. That is why separating debt into single names is so important.
When it comes to the marital home, the first decision is to decide if one of you is keeping the house or if it will be sold. Selling is the cleanest and easiest from a financial perspective. If one of you keeps the house, it should be refinanced into just that person’s name. That’s hard to do right now with interest rates high. But it should be done as soon as is reasonably feasible. A time frame should be established, as this can become an excuse for not moving forward. Understand again, if your name remains on the mortgage and your ex-spouse is living in the home, you will be responsible for the payments in the event they are not made.
Separating debt can be cumbersome, but it is necessary to do it correctly to avoid credit damage down the road. After the divorce is final, and you have each moved forward with your own responsibilities, check your credit every 6 months or so for a couple of years to ensure no debt is opened in your name without your knowledge.
There are classes you can take to learn about all the financial topics you may not have learned during your marriage. Everyone can manage their finances, it just takes a willingness to learn a new skill set. I offer a financial class, and I would love for you to sign up for it. Bring a few friends who are also interested in taking control of their financial lives. It’s always easier to learn in a community setting.
Good luck moving forward.
Kim
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