By: Melanie Sullivan

Winter 2005-06

Divorce involves many complicated issues, such as support, alimony and property division. But who gets custody of your good credit?

Divorce can prove financially as well as emotionally stressful. If you find yourself faced with a divorce, it is important to start planning your financial future now.

Follow these 10 guidelines to help maintain your good credit when going through a divorce:

1. Know your current credit and debt situation. Obtain copies of your credit reports as well as your spouse's credit reports. Make a list of all debts and decide who is responsible for each account (see sidebar).
2. Have a plan. Your divorce decree should state what will happen (frozen assets, wage garnishment, etc.) if your spouse stops making payments. Make sure you have quick legal recourse if your spouse stops paying, and ensure your ability to make those payments yourself if necessary.
3. Open a checking and savings account in your name only.
4. Get at least one individual credit card and utility in your name only.
5. Pay off all debts. Sell or refinance your house or other assets to cover outstanding debts, if necessary.
6. Close joint accounts. Request that joint accounts be placed in the responsible party's name only as an individual account. If joint accounts cannot be reverted to individual accounts, then freeze joint accounts and tell the creditor that you will not be responsible for any more charges after that date.
7. Remove all authorized users from your individual accounts - that especially means your spouse and his or her family members. Authorized users are not obligated to pay back any charges they make.
8. Don't stop paying the bills. Keep making regular payments during the divorce process.
9. Don't wait until you're in a crisis situation. Get your financial situation in order before you file for divorce.
10. Contact your creditors. Your creditors are not a party to your divorce decree and are not legally bound by it. If your spouse fails to make a payment for a joint account, the creditor can and will pursue you for the money; it also will appear on your credit report. However, the creditor may enter into a separate payment arrangement with you or take your name off an account.

Creditors are not required to change joint accounts to individual accounts. A creditor may require you to reapply for credit on an individual basis or refinance a mortgage in order to remove one spouse from the loan obligation.

Get all agreements with creditors in writing. Make notes of all phone calls including names, dates and the topic of conversation. Don't have your name removed from any title if you are still responsible for the loan.

Divorce is difficult even under the best of circumstances. Pay attention to credit issues before a divorce, and you can make the divorce process easier and relieve much of the stress.

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Melanie Sullivan is a military spouse with degrees in law and finance, and she is the author of a self-help guide to credit repair, "30 Days to Better Credit."

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Who's Responsible For What?

Individual accounts: You are responsible for paying any debt in your name, whether you are married or not. If you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin), both you and your spouse may be responsible for debts incurred while married. Individual debt of one spouse may appear on both your credit report and your spouse's credit report.

Joint accounts: Both you and your spouse are responsible for paying the debt. This is true even if your divorce settlement states that one person will be responsible for the debt. Joint debts are reported to credit bureaus in both names.

Authorized users:

You may authorize another person to use an individual account in your name, but you are responsible for the entire debt. If you are an authorized user on another person's account, you are not liable for the debt. However, the debt still may appear on your credit report.