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How can you protect your credit during a divorce?

For many divorcing couples, dividing assets is a key concern. However, the impact of debt can be more serious, particularly in community property states like Louisiana.

If you and your spouse have joint debt, which you likely do, your credit ratings are linked until you separate those debt obligations. Your credit rating determines not just whether you can get any type of credit, but how much that credit will cost. Everyone needs to protect his or her credit rating, but it's especially important for a soon-to-be-single person.

That's why it's essential for both spouses to ensure that all loan and credit card payments are made on time. Sometimes, one spouse decides to forgo his or her obligations out of anger, hurt or just the emotional upheaval of a divorce. However, that can impact the other spouse's credit rating.

Protecting your credit rating may require making the payments yourself, even if you have to borrow from family. You can't depend on a court order for your spouse to make a payment to relieve you of your obligation in a contract that you both signed.

It's wise to take some steps to protect your credit and your financial health as quickly as possible if your marriage is ending. Check your credit report. Close or freeze all of your joint accounts, but ensure that at least minimum payments on any outstanding balances are being made. Start building an individual credit history for yourself. Opening a credit card in your own name can be a good start.

If the two of you have a joint mortgage, it is generally best to sell the property and pay off the mortgage. Sometimes, couples decide to keep the house and refinance the mortgage in the name of whichever spouse will be making the payments. In that case, the other spouse needs to ensure that his or her name is not only off the title, but also the loan.

Your Louisiana family law attorney may be able to advise you on steps to take to protect your credit and refer you to a financial advisor. While this is likely a difficult and emotional time, it's essential to get sound advice to protect yourself financially. This will help you move forward on your own after the divorce.

Source: Institute for Divorce Financial Analysts, "Credit Where Credit's Due" Elizabeth Cox, MA, CFP, CDFA, accessed Feb. 04, 2015

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