Tuesday, 31 May 2016
In addition to your marriage being an emotional relationship, it has also been a financial partnership. Now that you are divorcing, be sure you get a financial divorce as well. To complete the process, all three credit reporting agencies must reflect your new individual financial status.
Early in the divorce process, pull up to date credit reports from each of the three credit reporting agencies: Equifax, Experian, and Transunion. All three are necessary because they likely will have differences in their reported content and you want to be sure to cover everything. It would not serve you well to have two accurate credit reports and encounter a prospective lender in the future who depends upon the third for their determinations of your credit worthiness.
Your purpose should be two-fold, identify those accounts that need to be "divorced" and assure that you will have at least two individual credit cards, of your own, post-divorce. You may have developed habits during the marriage of thinking of one card or another as "yours" and others as "his/hers." Or you might rationalize that only you have ever used a particular card. That doesn't matter. What matters is how the cards are registered with the card issuer.
There are three possible ways a personal credit card might have been issued:
Where possible, all joint credit card balances should be paid in full with marital funds. If funds are not available to pay off these debts, they will be assigned to one or both of you in the division of the marital estate. However, the assignment of joint debt to one of you does not relieve the other of joint responsibility in the eyes of the creditor. Your original contract with them assigned equal responsibility to each of you. Therefore, if your ex-spouse fails to make payments on debts assigned to them in the divorce decree, the creditor may still pursue you for payment. Your creditor is not a party to your divorce decree, and they are not bound by it. You still remain at risk until the balance is paid in full. You can "close" the credit card account while the balance is being paid off so that no new charges occur and it is completely closed, with no further action, upon payment in full.
If you have a number of merchant-specific credit cards that seemed like a good idea at the time, due to an immediate promotional discount on purchases, reconsider the role they play in your financial profile. If the same merchant accepts the major credit cards, consider closing the merchant cards. Such merchant cards can dilute your credit worthiness and reflect negatively upon your financial responsibility because they were applied for on impulse.
After the disposition of all credit cards has been determined, and acted upon accordingly, be sure to monitor your three credit reports until all changes are correctly recorded on each of them. The extra effort is worth it to assure that you effectively have a "financial divorce" in addition to your legal divorce.
Posted on 05/31/2016 3:31 PM by Rosemary Frank
03/24/2017Choosing an Attorney
I am often asked for attorney referrals by potential clients embarking on the divorce process. My usual response is that I am better able to make referrals after meeting with you, understanding something about your situation, what you prefer in the way an attorney will represent you, and getting to know you is a limited way. Even after all that, I will provide at least three names of attorneys for you to interview, assess and make your own best decision. An attorney is not a commodity. This is...
01/25/2017Preparing for Divorce
You have decided this divorce needs to happen. Now what do you do? Prepare yourself. The following are some steps to take before you pull the trigger and set things in motion. Take care of deferred needs like dental work, new eye glasses, replace the tires, fix the roof, etc. Money is going to get tight, real soon, so better to know these things are taken care of. On the other hand, you will need to save some cash for the expenses of the divorce process: hiring professionals like a financial...
What assistance can you expect from your current financial planner or advisor during your divorce? The short answer is "None." Your divorce presents a clear ethical dilemma and/or conflict of interest for your current financial professional. They must simply "sit it out," wait for the divorce to be finalized, then resume services, if you wish them to do so. Whether they realize this, or acknowledge as much, is up to them. However, this message is to help you make more informed decisions regarding...