By Rochelle Belnap, The AZCLG
Divorce happens. It sucks, and it is emotionally and financially traumatic. So now that you are divorced, what do you need to do to put the past behind you?
It’s all about the credit score, baby! First, review your credit report. If all of your accounts were joint accounts or you are only an authorized user, it is time to establish credit on your own. Why? Because you will need to close those accounts and be removed as an authorized user. Thus, you will have no credit. That’s bad. But there is a solution! You can re-establish credit on your own by opening a credit card or applying for a line of credit. If you need more information about this, check out our webinar “How to Build Credit After Divorce.”
What’s mine is mine, and what’s yours is yours. Second, separate your finances. If you and your ex still own property together or you have credit cards together, you should cut ties. Otherwise, these loose ends will haunt you for years! How? Here’s an example. Let’s say you two own a house together. You let them keep the house and they stop making payments- now what? The delinquent account will report on your credit report and the bank will call you to collect. I know you might be thinking “well, the divorce decree says…” yep, stop there. The divorce decree is not enforceable against creditors. This means that if your ex defaults you will still be required to make payments to avoid collections, or a lawsuit, or even a wage garnishment.
Professional advice is not expensive and sometimes free! Third, consult financial professionals like a tax advisor, insurance agent, financial planner, and estate planner. Why? You just experienced a major life event and it is time to make sure you are not going to end up with a monster tax bill, and it is important to update your docs- do you really want your ex to be the beneficiary of your life insurance, or your 401k? Most of these reviews or initial consultations are free!
Let’s recap! To get back on track 1) Review your credit report 2) Separate your Finances and 3) Get professional advice.
So good luck to you, my post-divorce comrades, and if you have major debt issues related to a divorce check out the blog “Divorced and in Debt- Now what?”
Thanks for reading!