Question:
My wife and I are getting a divorce and I was wondering what steps I should take to protect myself and my credit. We have two cars (one paid off and one still being paid on), two joint credit cards, two bank accounts with both of our names on each (but each of us only uses our own), and we are making payments on a washer and dryer. We have a town house that we share with her family that is under our names along with her sister and brother in law. I will be moving out an get an apartment on my own. Suggestions?
Answers:
I've been in banking and the financial advice business for almost 15 years. There are many life changing events that can send otherwise credit-responsible people into a quick spiral downwards ... divorce, illness and job loss are the main three. People can usually get another job. Hopefully recover from an illness or plan with good insurance. Maybe some smart savings and investments to help with both of those. A nasty divorce can ruin both parties - quickly and in my experience, senselessly.
At a first glance, your situation looks fairly straight forward.
First, big picture: as much as possible, get along - don't squable over minor amounts ... if when all the numbers sort themselves out you end up with 51% of the debt, and that won't serious affect your life - accept it. You'll pay way more to a lawyer in trying to negotiate the figure more.
Second, specifics:
(i) detach yourselves from each others bank and credit card accounts immediately. Like yesterday. One party takes a fit and runs up the cards ... then gets the benefit of splitting that debt in half. Seen it - often. Approach the respective bank and/or credit card issuer - the policies and procedures to do this are clearly laid out.
(ii) you likely have some equity owed to you on that house. Its fair to include that equity into the figuring out how to sort out your combined debts.
(iii) when the dust settles, each of you approach your bank for a loan to consolidate your share of the debt. It is a simple way to separate the debts into one easy to understand structure.
Don't get swept up in the "I can win" fever. Nobody wins except the lawyers in a nasty divorce.
Good luck.
Go seek Legal Advice!
Now my answer is strictly based upon your question, how to protect your credit. The legalities surrounding my answer is another issue you'll want to discuss with your divorce attorney.
1) Close and pay off all joint charge/credit cards.
2) Refinace the townhouse and car(s) into one of your names (prefeably whomever is keeping each respectively).
3) Close any joint bank accounts you have and split the money...but this works better if you do this together.
4) Reopen your own charge/credit cards in your name only.
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