Besides the obvious concerns about children, most parties to a divorce are primarily concerned with division of assets/property.
- Who gets the house?
- Can I keep the car?
- Am I entitled to this, or that item?
- Can my ex get any of the inheritance I received?
Meanwhile, they overlook the equally important issue of how liabilities (debts) may be distributed by the court in their divorce settlement.
In this day and age, it’s a fact that most people have debt. If you don’t, consider yourself very lucky. If you do, your debt likely comes from one or more of the following:
- credit card debt
- school loans
- car loan
- mortgage
- personal loans
You can probably guess why paying attention to liabilities is so important in your divorce: Who wants to have their credit ruined or get stuck paying off a debt they don’t feel they owe?
It is important to understand what you and your ex-spouse owe jointly, and what you each owe individually. This is why you need an experienced Florida attorney who specializes in divorce and the division of assets and liabilities, in order to ensure you get a fair judgment. If you don’t, you could end up with ruined credit which will certainly roll over into other aspects of your life.
As you close a chapter of your life and prepare to start a new one, my goal is that you can do that freely and happily – without a bunch of painful baggage trailing behind you.
Here are some tips for protecting your credit in your divorce:
1. Check your credit score. You’re able to obtain one free credit report per year from each of the three major credit reporting companies: Experian, Equifax, and TransUnion. Review your credit score closely.
2. Consider closing zero balance accounts that are held jointly. This will eliminate the risk of accruing any more debt you could be held liable for.
3. Have your spouse removed from any accounts where you are the owner and your spouse is an authorized user.
(Be sure to give your spouse notice that you plan to close accounts or remove his or her name from accounts before taking action.)
Here’s why it’s a good idea to do away with joint accounts before the divorce:
When you apply for credit with your spouse, you each agree to be held responsible for the debt. Although dividing debt from your divorce is part of a settlement, credit companies are not bound by the divorce decree and will still view your debt as jointly owned.
Your divorce decree should most likely have an indemnity clause. An indemnity clause provides that in the event your ex spouse defaults on his or her joint debt payments (for which you are now held liable), you can go after your ex spouse for the amount you had to pay. This, however, takes time and costs even more money.
Be aware that if you and your ex do agree to split jointly owed debt and payments are not made on time, your credit may take a hit. Make the payments yourself on time and keep a record of all payments you’ve made in the event you do enforce the indemnity clause against your ex.
Joint debts may also be listed in a bankruptcy should your ex spouse file for bankruptcy. This too will negatively affect your credit.
For any questions regarding jointly or privately owed debts in your divorce, contact me today. I serve Palm Beach County, Martin County, St. Lucie County, and Indian River County. I look forward to assisting you!
George E. Gelb has been a Jupiter Divorce Attorney for over 30 years. A former Assistant Attorney General, George was also selected Palm Beach & Martin County’s Top Lawyers and voted a Florida SuperLawyer by his peers in the legal community.