Repair Credit: How Do You Repair Credit After a Divorce?

Financial problems are the number one reason that couples seek counseling, and also one of the top causes of divorce. Did the end of your marriage leave you with less than sterling credit? Here are some ways to start to REPAIR CREDIT ratings and rebuild your financial life.

Adjust to Your New Budget

Chances are, you’ll be paying for more house with less money after your divorce. If you are keeping the house, you’ll be paying a mortgage on your own that used to come from two incomes. If you are finding a new apartment, you will probably find that it is more expensive to rent a place on your own than to share one.

To keep yourself financially healthy, add up income versus expenses and figure out where you can cut back. Some people, when income is reduced, rely on credit to make ends meet. But, if you have no immediate prospects to increase your cash flow, this can result in debt that you can’t easily pay. Instead of getting overextended, look at expenses such as health club memberships, cell phone contracts and other bills to cut costs before you wind up over your head.

Divorce Doesn’t End Financial Obligations

After the divorce, you will most likely share responsibility with any joint debt run up during your marriage. This is true even on joint cards where your ex ran up large balances without your knowledge and in violation of your divorce decree. Make sure that you know about all open accounts and standing balances, no matter how amicable your split.

Close as Many Joint Accounts as Possible

Call your creditors and have yourself or your spouse removed as a joint account holder or authorized user. No matter how agreeable you both are with one another during divorce negotiations, you need to legally protect yourself. If the accounts are closed or your ex is removed, you are safe from further debt being added.

As Much as Possible, Work with Your Ex

If one of you bails on an obligation to pay your share of the debt, it hurts you both. It can be awkward to continue to discuss joint finances with someone after a split, but, it will serve you both better in the end if you can tackle debt together.

Some couples find that the most equitable way to deal with old debt is to each keep a card that is only in his or her name and transfer a portion of the balance of shared debts to that card. That way, neither is harmed if the other is unable or unwilling to keep up with financial obligations.

Divorce is not pleasant for anyone. But, it does not need to destroy your financial future. By taking stock of your current financial situation and working to repair credit records, you can start the next phase of your life with a healthy financial outlook.