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Establishing separate credit histories in a divorce

| Dec 5, 2017 | Divorce

For many divorcing couples in Connecticut, separating finances can be complicated. Once they are done with the process, however, they’ll be able to begin building individual credit histories. If a person has a line of credit with the spouse named as an authorized user, that spouse should be removed. This should prevent the spouse from being able to run up bills in the other person’s name.

Divorcing spouses should open individual bank accounts. Any shared debts will usually be divided in the divorce, so people should try to pay only their share of debts prior to the divorce. The exception is if the other spouse is not paying the debt and it will affect an individual’s credit rating. If this is the case, then it may be necessary to pay.

It is important for people to start building an individual credit history in other ways as well. This could include opening lines of credit, but this credit should be used responsibly and paid off regularly. It can be tempting to overspend after divorce, but people should track their budgets carefully to avoid falling into debt. They should also monitor their credit reports to make sure they remain accurate and that a former spouse’s financial activity does not appear there.

There are other financial pitfalls that spouses should be aware of during the property division process. For example, there may be specific rules about avoiding penalties while dividing some pensions and other types of retirement accounts. A person who keeps the family home should make sure the mortgage, upkeep, insurance and taxes are affordable on a single income. A family law attorney could help a client throughout the divorce process.