When divorce ruins your credit

In these economic times, more people are going to come out of a marriage with serious blemishes on their credit report. That is because there are more and more foreclosures, and because many people are losing their jobs, more and more bankruptcies.
The thing with marriage is that it opens you up to not only your financial misdeeds, but those of your spouse as well. Many of the debts incurred during your marriage are joint debts which means that if one party is not able to pay, then the creditors can come after you. Sometimes, you are not even aware of the debt, yet you are held responsible for it, just on the basis of your marriage.
It is easier to keep certain debts separate than others. The marital home or other real estate acquired during a marriage are difficult to keep separate. That is because the lenders require spousal information when you purchase real estate. Often times you are a co-signer on the loan, or you are on the deed, or your spouse put the property in trust in your name. So the lenders can definitely track you down if they can’t get payment from your spouse.
Even credit card companies can get you through real estate, because they can put a lien on real property, or a lis pendens or some other legal restraint if you are behind on your credit card bill. And they usually got this information when you filled out the form for the credit card in the first place. Somewhere on it, they asked if you own or rent your property and there it was, you opened yourself up to getting your credit ruined.
The days of coming out of a marriage with equity in a home are behind us. At least, for now. Most people are coming out of marriage with no equity in their homes. All they have is massive debt. Between the house, the car, the legal fees to get divorced, the medical debt (if they have no insurance), job loss, and just the every day financial strains of survival, people can find themselves in trouble pretty quick.
But there are some ways to protect yourself a little bit after a divorce. First of all, make sure it is one of the conditions of the divorce, that your name will be removed from any joint debts. If it is the house, insist on a refinance so that your name is removed. And go to the county clerk to see about getting your name off the deed – if that is what you want. As far as credit cards, the same thing. It should be a part of the signed stipulation of settlement that you are not responsible for whatever debt it is you are disputing. You may literally have to put that issue to the court if it is a problem convincing your spouse to take your name off.
Your spouse and you should indemnify each other from having responsibility for any debt you do not want to be viewed as joint. Make sure you send a certified copy of the stipulation to these creditors. There is no guarantee the creditor will actually get around to removing your name and that you will stop getting calls from bill collectors, but it is better to have the stipulation saying you’re not responsible, than not to have it.
If all else fails and you find that you do have to file bankruptcy, that is devastating, but there is life after bankruptcy. The bankruptcy laws were promulgated to give people a “fresh start.” It is a long road back, but with perseverance, you will get back. You just have to focus on increasing your score, and being more discriminating when it comes to how you handle your credit.