The Bad News
If you must go through a divorce, hopefully it will be as easy as possible. Ideally, you will come to agreements smoothly and quickly. However, it doesn't always work out that way. If there is any tension in a divorce, you need to be on the lookout for dangers to your credit.
Account Users
Sometimes a person puts a spouse on a credit account as an authorized user or account user. An account user is authorized to use the account, but that person is not responsible for paying back any debts. In other words, they can charge stuff, but they don't have to pay it back — the account owner does. If your ex-spouse was an authorized user, you need to change that. Again, divorce applies to your marriage, not your credit accounts. Your ex is still an authorized user, and you may not want that to be the case. If he has a charge card that you are responsible for paying on, he can still use it after a divorce. If he racks up a lot of debt, that is your problem, not his — unless he is a joint account holder, then it's a problem for both of you.
Remember that your lenders are not a part of your divorce settlement. They're just some innocent bystanders who lent you some money. Although they probably hate to see you suffer, their main priority is to get their money back sooner or later.
Imagine this worst-case scenario: Your ex-husband is an authorized user on an account that is owned by you. After a divorce, you've been really busy, and haven't gotten around to cleaning up all of your accounts. He still has his credit card, and there is $10,000 of available credit on the account. He uses the card for a vacation or two, and maybe some new toys, like expensive bicycles. The next time you get a statement, you see $10,000 of new purchases. You call your ex and ask for the money, and he is not cooperative. You can fight all you want, but the credit card company says that you are responsible. If you refuse to pay, your credit suffers (and your husband's will as well, but he's not on the hook for repayment). The lesson: get your financial affairs cleaned up immediately.
But the Divorce Says…
Even if the divorce agreement says that your ex-spouse is responsible for paying a debt, the creditors aren't part of that agreement. If your name is on the account and it does not get paid as agreed, your credit will suffer. Granted, your ex may have violated the terms of the agreement — and you may be able to recover damages from her — but the creditors will still report the account as delinquent if you fall behind. You might be better off keeping the debts current yourself by paying what your ex is supposed to pay (assuming this fits into your budget), and then going after the money later.
Unilateral Action
As a joint account holder, you do not need your spouse's permission to do things on an account. Therefore, your best bet might be to call the creditors for any account that is held jointly (or with your spouse as an authorized user) and close the account. You can reopen accounts in your name only, and you won't run the risk of having another person racking up debts on the account.
Remember not to get too crazy with closing and opening accounts. If you try to open too many new accounts in a short period of time, your credit will suffer because of all the inquiries. As preventative medicine, keep individual accounts in your name before the divorce, and only open the accounts you need after a divorce.
Who's Debt Is It?
Usually, you can assume that any debts that you are not a joint holder on are not your responsibility. Usually. However, there are a number of states that think otherwise. In community-property states, any debt incurred during the marriage can be considered joint debt. Your creditors might not have you on as a joint holder, but you need to be aware of this for your own financial planning. You will need to budget for payments on those debts that the state says are yours.
Don't Make It Worse
Divorce will not be a pleasant experience. You may have a million things to do when you are managing a divorce, and your credit might not be your top priority. However, your credit can suffer during a divorce, and it might just be the thing that helps you stay afloat after the whole thing is over. Make your credit a priority, so that you have one less thing to recover from. Plenty of divorces lead to bankruptcy. It is often because the loss of combined incomes (or one income that supported everybody) is too much of a strain. However, others go into bankruptcy because the divorce went badly. These bankruptcies could be avoided.
