Protecting Your Credit

If you are planning to get a divorce or you are already involved in the divorce process, it is important to protect your credit from potential damage by your spouse. For example, if you have joint accounts, your spouse may be able to damage your credit even if he or she is ordered by the court to assume sole responsibility for the account.

What happens if a court orders one of the parties to be solely responsible for a joint credit account and that party defaults? The creditor is going to come after the other party, even though the court has ordered the first party to pay. How can this be? The contract clause of the United States Constitution prevents courts from interfering with contractual obligations. Credit is a contractual obligation between the creditor and the debtor (you). If you have a joint account with your spouse, and your spouse defaults on a court-ordered credit obligation, the creditor will look to you to pay, and your credit rating will suffer. A bankruptcy court is the only court that can affect your contractual relationship with a creditor.

Since you may be stuck paying for a joint debt, it makes sense to try to avoid placing yourself at such risk. If you are planning for a divorce, get all your joint credit accounts changed into separate accounts, you will need your spouse’s permission to do this. If you are already involved in the divorce process, eliminate as much of the joint debt as you can.

The same is true for joint bank accounts. If your spouse overdraws on a joint account, guess who the bank will expect to pay the overage – you!

Once you are divorced, you will be a single person. You will want to be able to the only person responsible for your credit rating. It pays to take the necessary steps to put yourself in control.

Good luck to you as you leave the marriage zone, and remember to get rid of those joint accounts!