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Safeguarding credit during divorce

The end of a New York marriage should not mean the end of good credit and financial stability. Protecting credit during a divorce can help assure a spouse's ability to obtain loans and pay for their needs.

Obtaining a credit report is a crucial first step. A report discloses lines of credit, liens and outstanding credit card debt. A spouse may usually review or explain any negative data, such as divorce, foreclosure or a noncustodial parent's violations of a support order.

Joint accounts should be separated. A spouse may be held liable for their former spouse's debt if they continue to keep joint accounts intact. Debt should be refinanced into separate payment accounts.

Closing credit accounts, however, has pluses and minuses. It keeps a spouse from being responsible for any debt incurred by their former partner, but it may also lower credit scores. After a spouse transfers debt to their own cards or pays it off, a freeze should be placed on their cards. This is recommended if there is an expectation that a soon-to-be-former spouse will deplete the account or recklessly use funds.

Filing a summons is also an effective way to protect against a former spouse from accruing debt during separation. A summons begins the legal process of ending the marriage, and ensures that any new assets and debts are kept separate. Opting for automatic bill pay on existing accounts is also a good method of assuring prompt payments, which in turn helps in building up your credit score. Starting a secured credit card with a friend or family member can also serve as a valuable tool in helping to re-establish or bolster credit scores. The one caveat to remember if one chooses to engage in co-signing for credit is that it puts you at risk for guaranteeing payment for the relative or friend in the event that they default.

Once a credit card is obtained, making purchases between 50 percent and 90 percent of the credit limit and paying off at least 30 percent of the bill also builds credit. Spouses with a credit score of 600 may be eligible for an unsecured credit card.

An attorney can help spouses planning for divorce to protect their finances and seek a reasonable decree. They may help prevent the soon-to-be-former spouse from harming finances or violating your rights.

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Linda M. DiPasquale, Attorney at Law

Linda M. DiPasquale, Attorney at Law
1 Niagara Square
Buffalo, NY 14202

Phone: 716-800-2591
Fax: 716-854-0059
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