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While marriage is a financial relationship as much as it is an emotional one, debt and divorce often go hand-in-hand. Unfortunately, parting ways with your spouse can sometimes lead to financial mistakes and complications that put your credit score at risk, especially if you share accounts or liabilities. While a divorce decree will not protect you from creditors, it’s important to be proactive and take the necessary steps to protect your credit and secure your financial future both during and after the divorce process. Being able to discuss these items with your spouse before making unilateral moves is always better than someone finding out by accident and being reactive and angry, causing even more problems and putting them on the defensive. Trust is one of the most precious commodities in a divorce so think about where trust is on financial issues and think about best ways to move forward.
The following are several tips to protect your credit during divorce:
It’s crucial to monitor your credit report for any changes or suspicious activity during and after a divorce. You can obtain free reports from the three credit bureaus (Experian, Equifax, and TransUnion). Review these reports for joint liabilities, any unauthorized usage, and potential fraud. Look for new accounts opened in your name, missed payments on debt shared with your spouse, and ensure joint accounts are correctly updated to “closed.” It’s important to be prepared to dispute errors or discrepancies immediately to prevent long-term damage to your credit history.
When dealing with debt and divorce, it’s vital to keep your joint bills current, even if your spouse was responsible for making payments. Divorce actions and decrees are irrelevant to creditors. They will pursue both you and your spouse if either of you stops making payments. If you were ordered to make payments by the court as part of a temporary order or the final judgment, be sure to do so to avoid penalties, fines, or being held in contempt of court.
If you are the primary cardholder, you can remove your spouse as an authorized user from a credit card account at any time. This can help protect you from being responsible for charges made by your spouse. In contentious situations, a spouse may attempt to run up the balance in an act of “revenge spending.” You should also consider asking the credit card company for a new card with a new account number to ensure your spouse cannot use the card with the old number. And providing your spouse with a heads up that they are being removed rather than they learn about it in a moment of making a purchase will help keep things calm rather than putting someone in panic mode and trust being lost.
It’s imperative to close any joint accounts you share with your spouse but being thoughtful about timing and communication with your spouse are important. If there will be a new home purchase in the short-term, closing accounts can actually negatively impact credit scores and therefore interest rates. Asking for a referral to a mortgage broker who has a lot of experience with divorce clients can help you avoid some common mistakes. Closing joint accounts can prevent your spouse from running up credit card debt during divorce on an account for which you are both responsible. But think about whether it is necessary at the start of the divorce or not. Many spouses are not going to drain accounts, so consider this carefully. If you cannot close the account, consider freezing it to prevent your spouse from making any further charges.
Establishing individual credit is one of the most important things you can do when dealing with debt and divorce. Once the divorce action has been initiated (or before, if possible), you should immediately open new accounts in your name only. Apply for a new credit card solely in your name to begin building your individual credit history. You can put a low credit limit on the card if that would be helpful. Again, opening too many accounts at the start of a divorce when there will be a home purchase could cause unexpected problems. If your credit score prevents you from obtaining a credit card, you may be able to open a secured card. Keep your balances low and pay the cards off in full, on time each month if you are able to help boost your credit score.
Updating your account information is essential to prevent your spouse from incurring new joint debt and protect your credit score. Not only should you ensure your address, phone number, and email are updated so your spouse does not receive your credit card statements, but you should also update usernames and passwords for online accounts. If your spouse has access to your credentials, they could take it upon themselves to change the password and lock you out of the account or track your spending habits once you are separated. Changing your account information is a simple measure to take to protect your privacy and secure your personal information.
If one spouse will be keeping the marital home, a vehicle, or another marital asset with debt attached, it should be refinanced in their name alone so the other spouse does not have to remain liable. This is often done after the divorce is final and people know what debts they will be responsible for going forward. Otherwise, selling the asset and using the proceeds to pay off any remaining debt can help to protect both parties’ credit scores with neither being held responsible for ongoing payments.
If you are concerned about debt and divorce, it’s vital to have an experienced divorce attorney by your side who can help you make informed decisions. At The Law Shop Minnesota, attorneys Louise Livesay and Peter Ladwein help clients across Minnesota with resolving their divorce and family law matters with respect, clarity, and compassion. They can also evaluate whether your case is appropriate for mediation, the collaborative process, or another form of alternative dispute resolution.
To schedule a consultation at either our St. Paul or Edina offices (either in person or via Zoom, anywhere in Minnesota), please contact us online or call (651) 344-6100 for convenient, accessible legal support.
Louise Livesay and Peter Ladwein share a commitment to helping families find peaceful, practical solutions during difficult times. Together, they bring compassion, experience, and a personal touch to every case they handle.
With more than twenty years of experience, Louise has guided countless families in the Twin Cities and across Minnesota toward out-of-court resolutions through collaborative divorce, mediation, and other flexible, client-centered options. Peter shares that same dedication to protecting families and their futures. Having firsthand experience with a special needs family member, he brings a deep understanding and empathy to his work. Licensed in both Minnesota and Illinois, Peter helps clients navigate the legal process with care and clarity.
Louise and Peter work together to ensure every client feels supported, informed, and confident in moving forward toward a positive resolution.
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