Protecting Your Credit During Divorce In California

When going through a divorce in California you need to be careful to protect your credit as well.  Lot’s of things can come up and we frequently see people ruining their credit during California divorce, either because they are also going through bankruptcy, losing a home or because one of the spouses stopped paying the bills.  Watch this video for ways to protect your credit during divorce in California.

Below is the transcription of the video.

Today, I wanted to talk to you about bankruptcy a little bit and credit when it comes to Divorce.

So we have been seeing a lot of folks who are going through Divorce and also going through a bankruptcy or soon to be filing bankruptcy.

And of course bankruptcy is one of the major issues surrounding Divorce or I should say money problems are a leading cause of Divorce.

And so you may find yourself going through bankruptcy or having financial problems with your Divorce but I want to talk a little bit more about your credit and how that works related to going through a Divorce.

So I was talking to a credit repair agency person recently. And it just happened we’re chatting about a credit and how it’s affected by Divorce.

And a couple of topics came up that I want to share with you.

Number one, the number one issue with Divorce in credit is that when you go through Divorce and let’s say you have $20,000 in debt.

And that’s going to be paid and agreed to be paid by let’s say your spouse. Your spouse agreed to pay.

It’s in the agreement, it’s in the marital settlement agreement and it’s in the judgment.

So you have a piece of paper signed by both you and your spouse and the judge may be ordering and agreeing to the fact that your spouse is going to be responsible for that debt.

What you need to know is that the judge order and your spouse and you and your spouse agreement does not supersede that of the credit card company.

So what is that mean?

If you have a joint account or joint credit card that has a balance of $20,000 just for simplicity sake and your spouse agrees to pay it yet he doesn’t or she doesn’t, even though it’s in the agreement, there’s nothing really that you can do.

The credit card company does not care about your agreement or the judge order regarding the credit card debt.

You have a credit card that’s a joint account where both of you have signed and are responsible for that liability.

So that can become a problem where you are having an agreement, yet they’re not following through an agreement in paying it.

So you may want to consider doing, is start dividing up your debts putting them in separate accounts. Maybe get a separate credit card before your credit is ruined by not making these payments.

Get a separate credit card that way you can transfer the debt if it’s going to be each paid by half.

Put $10,000 in to each credit card account individually, individual credit card accounts so your credit can’t be ruined by your spouse.

One of the other things is when you’re going through a Divorce is people credit is impacted negatively because people stop paying debts in some cases.

So you guys are in agreement maybe just one of the spouses had already moved out of the family home, and they stopped paying on credit card debt. And their credit, your credit starts to be ruined.

And then what happens is when you have no choice. You’re not able then to get new credit cards or separate that your credit is already ruined.

And now you’re going to have that problem in filing for bankruptcy if you’re not able to get yourself out of that debt, if your spouse is not paying that debt off as agreed and things in that nature.

So unfortunately most people aren’t planning on Divorce but if you see that it’s around the corner you may want to start separating your debt.

You need to protect your credit because we have clients again going through bankruptcy at the same time as Divorce. It just adds one more stress to your life.

It’s best if you can get that dealt with beforehand because if you have to file for bankruptcy or even if you don’t but you have all this a must credit card debt that you can’t get out from under, you’re going to have trouble re-establishing your credit for years and especially with the bankruptcy, I think it’s seven years before that even goes away.

And so not only do have a Divorce and that on your shoulders but now you have ruined credit.

And you’re going to need that credit to re-establish yourself, to restart your life, to even rent an apartment.

I’ve had wives in here who were trying to rent. Their credit was ruined because of some of the issues we’ve talked about here.

And so they had—they’re trying to get lots of reference, they had a co-signers because their credit was really bad because they stopped paying their bills or were unable to pay their bills or whatever the case maybe during the Divorce process.

So just keep that in mind and try and protect your credit. Don’t let that be one more victim of the Divorce.