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by: Mark J. Maroon
"Opinions expressed are solely my own and do not express the views of my employer."
Even the divorces and breakups that start out friendly sometimes get tenuous before they are final. Regardless of who was wronged, who was innocent, how the blame is divided, or whether the union simply soured, it is the end of a relationship. It can be perceived as a time to mourn, but it is also a new beginning.
Even though that spouse may be a thing of the past, always remember that your finances will follow you for a long, long time. Here are a few things you need to know.
Steps You Can Take to Protect Your Credit
1. Get a copy of your credit report. Just notify each of the credit bureaus (Experian, Equifax and TransUnion) or obtain a free copy of each report online here.
2. Take an inventory of your credit. Make a list of all creditors. Secured creditors are those that attach an asset as security for the debt. If your home is mortgages or you have a loan on your car, for example, your home and car are assets used as security or collateral. Unsecured creditors are those that lend you money based solely on your promise for repayment.
3. Separate joint accounts from individual accounts. Joint accounts are those containing both names, and each of you is responsible for the debt. Individual accounts are those opened solely in your name.
4. Call joint credit card lenders. Find out if the credit extended is based on your credit or your partner’s credit. If the credit is based on your credit, but your partner has a card, ask to have your partner removed. If the credit is based on your partner’s credit, as to have your name removed.
If the lender refuses to remove a name from the account, close the account and open a new account. If you have a balance on your credit card, the creditor will not close the account unless you pay off the balance. But you can prevent further charges on the account by asking for the account to be frozen.
5. Sell or refinance secured assets. It is important to separate the liability for secured assets. If a car is financed in both names, regardless of whose name is on the titles, both of you are responsible for the loan. If a mortgage is held in both names regardless of whose name is on the deed, both of you are responsible for the mortgage.
Even if your divorce decree assigns possession of those assets to one party , or if one of you voluntarily transfers title to the other, the liability for the loan will remain if you do not sell or refinance the asset.
Refinancing Your House
Should you reach an agreement whereby one person will remain in possession of the home, then the best thing to do is to remove the existing loan and replace it with a new loan.
Record a New Deed
Ask your lawyer or title company to draw up a deed that transfers title from one person to the other. Commonly used deeds for this purpose are quitclaim deeds, but your lawyer may prefer to use a warranty deed or a grant deed.